Student Question
Reaching out to you as a long-time follower, hoping to consult Master privately on a real estate question here in Shanghai.
I’m a newcomer to Shanghai. My husband and I run a small foreign trade business together — about ten employees, focused on a niche product category for over a decade. The early years were tough, but in the last five years we’ve developed some major clients and things have steadily found their footing. Annual revenue is roughly 1 to 2 million RMB. Our child currently attends a well-known private primary school.
At the end of 2006, before prices really took off, we sold our first apartment — an 80 sqm unit near the Xinzhuang metro. We traded up within the same area to a proper three-bedroom, 130 sqm metro-adjacent apartment, the one we’re in now, completed in 2005.
The bank’s current valuation is approximately 9.6 million RMB.
Because this property has limited upside potential, we’re planning to sell it and upgrade to a detached townhouse in the Huafu Tiandi development in the Qizhong area of Minhang — right next to the Tennis Center, with Lianjing Plaza just across the road. The target price range is roughly 13.5 to 15.5 million RMB. After paying off the remaining mortgage, we’d have about 2 million RMB cash on hand.
My husband prefers stability and thinks our current home is perfectly fine. That said, he’s willing to go along with my plans. We’ve also spoken in detail with a bank manager we know about a mortgage-backed business loan — but the maximum available is only 6.8 million RMB with significant restrictions, so the only viable path is to sell first, then buy.
I have three questions for Master:
1. I’ve consulted with Lianjia and Pacific Real Estate. Secondary market prices have dropped more than 10% from their peak, and they estimate our apartment would fetch at most 930,000 to 940,000 RMB — well below my expectation of 980,000. Is the secondary market headed further downward over the next year? Should I abandon the Huafu Tiandi plan and wait to see whether prices recover, or should I move quickly to sell?
2. Master, you’ve mentioned before that you have some insights on selling property. Could you share them? For example, listing strategies and how to work with agents effectively?
3. Regarding the purchase and remaining cash: buying a corner unit would leave us with about 700,000 RMB after the down payment; buying a middle unit would leave around 2 million RMB. Given the current climate, is the corner unit too aggressive a move? Is the cash buffer simply too thin — or, for that matter, is buying Huafu Tiandi at all too bold a step? Perhaps the safer choice is to hold our current home and buy a smaller unit instead. But with a property already in our name and insufficient residency points, we can’t compete for popular new developments.
I deeply resonated with Master’s writings on the theme of “family harmony brings all things into balance.” But the many changes unfolding both domestically and globally have left me full of worry — terrified that one misstep could put my family in a very difficult position.
I humbly seek your guidance, Master. With gratitude, and with wishes for peace and prosperity for our nation.
Master Chi’s Response
No need to overthink this. Selling the property is definitely something to set aside until next May or June at the earliest — the future is unclear right now. If you sell and buy today, you’d be locking in a sale near the bottom. There’s simply no need for that.
There are things I can’t say because they’re too sensitive. But just keep this in mind: what’s coming next will certainly include a coordinated wave of supportive, gradually loosening economic policy measures. Exactly when they’ll land — none of us can say. A quarter earlier or a quarter later are both entirely possible.
So to avoid unnecessary hassle, put this whole matter out of your mind for now. Revisit it next year.
As for Huafu Tiandi in Minhang — honestly, it’s a fine development in most respects. The one real weakness is public transit access. I’d encourage you to use these next six months well and look at more options on the market. Or better yet, tell me why you’re so drawn to this particular development, and I’ll help you think through the potential risks.