Chinese real-estate craziness

Reading about the property bubble going on in China would make any ex-Spanish property speculator feel inadequate.

It's gotten to the point now where even the maids are are speculating on the property market. One lovely quote:

“You should buy two,” the sharp sales girl suggested. “In three years, the price will have doubled. You could sell one and get one free.”

A recent TV drama series named "Snail House" was pulled off the air, apparently hitting a bit too close to home:

In the fictional city of Jiangzhou where they live – the show is shot in Shanghai – ever-spiraling costs and rising prices outstrip every effort by Haiping and her husband to save. The harder they try, the more they fail, and quarreling becomes common.

But Haizao, who works for a property developer, finds a solution to both of their dilemmas: She dumps her innocent boyfriend and becomes a mistress to the mayor's powerful chief of staff, the handsome and corrupt Song Siming. Soon, Haizao has cash for her elder sister's down payment – and gets her own home.

Marbella anyone?

State of real estate in Sant Cugat

Commercial real estate is really hurting. For some reason, Sant Cugat built large numbers of office towers, which are now completely empty (as in you can see right through them). And they are still building more.

The new Mira-sol “market” is starting to look somewhat post-apocalyptic, with the entire commercial ground floor unoccupied. In typical Spanish fashion, graffiti, garbage and broken windows aren’t really helping make it very attractive.

Residential hasn’t drop by price by that much, although it’s generally not selling very quickly. We have a house next door that’s been on sale since we moved here over two years ago. The new developments are selling with all kinds of gimmicks (100% mortgages, rent with option to buy, etc). On a monthly payment basis, the low interest rates make the overpriced places still quite affordable.

At one place the bank will buy it back from you in 5 years (assuming the bank is still around).

Rents have dropped much faster. We recently got our landlord to drop our rent by about 15% (we could have probably gotten more, but we’re pretty bad negotiators).

Sadly enough, our international neighbors have moved back to their home countries for economic reasons. One guy’s job over the last year was to close most of his company’s factories, turn the lights off, and move back to his country.

Avatar and China

Small consolation to the people about to get their homes bulldozed here in Spain. At least they don't live in China:

BEIJING: The bull-dozers await at the gates. An evil corporation sends its guards, using every possible threat to move the residents from their land. But all resistance is futile. The people watch in horror, as their homes get torn down to rubble and they are forced to relocate.

[...]

This also happens to be the plotline of James Cameron’s epic blockbuster film ‘Avatar,’ which opened in China last week and has seemingly taken the country by storm.

[...]

The resonance was so deep that some film critics here dismissed the plot-line as “too common.” “Some Chinese movie critics think that while the movie is not bad, parts of the plot were too mundane,” the popular and controversial writer Han Han said. “I completely disagree, because brute-force eviction is unimaginable for audiences in other countries because they think that it can only happen on alien planets. Or in China.”

[...]

The only difference between Mr. Cameron’s film and land conflicts in China, cinema-goers said, was the plot’s denouement.

“The humans actually failed to successfully evict and demolish [the aliens]?,” one blogger wrote. “Truly embarrassing. Why didn’t they send China’s chengguan [security guards] there?”

Watch out for underwater mortgages in Spain

From this article it appears that if you have the unfortunately luck to end up underwater in your mortgage (where the loan-to-value exceeds the permitted values), the bank can force you (after an independent appraisal) to either

1. Extend the mortgage to pledge other assets as collateral
   
2. Pay off enough of the mortgage to bring it into compliance
   

If you do neither of these things within two months, the debtor has “chosen” to immediately repay the entire mortgage.

Ouch. I'm not sure how often this would happen in practice though.

Renting a place in Sant Cugat

Places in Sant Cugat are still totally overpriced compared to what you can find by renting. Remember that listed rents are "suggested" and you are expected to negotiate the price down.

Due to overly friendly tenant laws, you will be expected to make a deposit of several (3-6) months rent (there's also some kind of bank escrow thing you can do, but its usually more pain than its worth). The reason behind this is that it can take up to 6 months to kick out a non-paying tenant. If you work for a big company, getting a letter saying how important you are sometimes helps lower the amount.

Something to remember: if you haven't made a deposit for the place, it's not yours! Most likely the agent is trying to shop it around to other people and get a better price. So if you find a better place in the meanwhile, don't worry about blowing off a previous place.

If you use an agent, it will cost you one months rent in fees, so you might be better off looking in Tot Sant Cugat (a little free red magazine that's always laying around somewhere).

If you think your rent is a rip-off, then just phone your landlord and say that you are moving unless they lower the rent. It's really that easy.

Ghost towns in Sant Cugat

Went for a walk yesterday around the new construction around the Mira-sol station. It's an amazing testament to the "build-it-and-they-will-come" philosophy of town building. It looks like the residential parts are occupied, but the street level commerical areas are completely empty.

Given the rate of vandalism here, I wouldn't be surprised if the commercial areas become completely unusable. Like, for example, that giant empty eyesore next to the Corte Ingles in Sabadell.