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June 3, 2011 10:02 pm

Shanghai, riding high

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Nightlife in the Xintiandi district

Nightlife in the Xintiandi district, an area popular with expats, where traditional houses have been incorporated into a piazza-style development

Off the Nanjing Road, once an area of parks and gracious mansions, and now a bustling thoroughfare lined with European designer stores, a side-street leads into an unexpected warren of lanes, characterised by shikumen (“stone gate”) terraced houses. Today, dozens of families crowd each of these once-splendid 19th-century buildings within the typical gated communities of Shanghai’s former International Settlement. Laundry billows like a colourful canopy from bamboo poles extending from windows, and life is played outdoors, in full view of the neighbours.

According to city historian Peter Hibbard, more than 80 per cent of Shanghai’s longtangs (as these lanes are called) have been demolished since the start of the construction boom and their residents relocated. Gleaming futuristic skyscrapers have taken the place of two- and three-storey houses, rocketing up among the city’s neoclassical, Victorian and Art Nouveau buildings.

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In a culture where “new” is synonymous with “better”, those shikumen houses that have not yet succumbed to the bulldozer had their brickwork and stonework hastily smothered in painted cement in the run-up to Expo 2010, in a crude attempt at beautification. “There is a disdain for the old here,” Hibbard says. “Restoration means making things look like new.”

There is, nevertheless, a growing awareness of the city’s heritage, according to historian Patrick Cranley, a Shanghai resident for 15 years. “Over 2,000 buildings now appear on the protected list, even if there is little understanding of the principles of conservation,” he says.

This is in part due to the success of the Xintiandi project, Hong Kong-based Shui On’s development of traditional grey-brick shikumen houses into a large, piazza-style retail and restaurant complex in the former French Concession area. It may not be echt from a conservationist point of view but, in the words of its architect Ben Wood: “Shikumen buildings were underpinned and restored, and the scale and character of the area was preserved in a manner which also worked commercially. Every other developer simply wanted to pull the place down and start again – which would have been a much less costly expedient.”

A map of Shanghai

Now 10 years old, the buzz around Xintiandi has made it one of the city’s most desirable residential areas and one popular with expats. This popularity is set to rise with the projected building of an international school. Prices there have quadrupled in five years: an apartment in the Lakeville, the first of a three-phase development on Xintiandi’s doorstep, could be bought for Rmb28,000 (about £2,600) per sq metre in 2005, but a new apartment in phase III, Casa Lakeville, is now on sale via Savills China for Rmb120,000 (£12,000) per sq metre.

Xintiandi’s success has inspired similar projects – lip-service, some say – to restore historic buildings, the most recent and ambitious of which is the redevelopment of Sinan Mansions in the French Concession. “The only ‘original bits’ are the bricks,” says one critic, who wishes to remain anonymous. “The project staff have zero knowledge of the history of the buildings, which is par for the course, but it is still disappointing for a project that ‘sells’ history.”

Close to the former homes in the French Concession of Sun Yatsen and Zhou Enlai – which, being of historical value, remain untouched – Sinan Mansions involves the rebuilding of 49 colonial mansions from the 1920s and 1930s. Some of these have been realigned (or even relocated), along with new-builds, to form a well-scrubbed multi-use complex of hotel, restaurants, retail and residential properties for the super-rich. When the apartments go on sale later this year, Savills expects they will be priced at Rmb200,000 (about £19,000) per sq metre.

This would put Sinan Mansions on a par with the river-view apartments of Tomson Riviera in the new financial district of Lujiazui, across the Huangpu River in Pudong – an area also popular with expats. Completed in 2008, its marble lobby housing two giant silver pandas and, bizarrely, a portrait of Mao, the Riviera’s high-rise apartments were initially priced at around twice the equivalent rate of Lakeville in a self-conscious bid for the prestige market. Despite 360-degree views over the Bund and Pudong, several of the 430-sq metre and 600-sq metre apartments remain available – the latter for £12m.

 
The new Lakeville development

The new Lakeville development

While conservationists decry the destruction of Shanghai’s architectural heritage, the government’s concern is to cool down the overheated property market. “People imagine house prices are determined by supply and demand,” says Xintiandi estate agent Nicky Zhu of Ricacorp Properties, “but this is not the case here. The government controls everything through regulations, which change all the time, to either slow or accelerate the market as required”.

Post-Expo 2010 measures include interest rate rises, a requirement for bigger downpayments and restrictions on lending to developers. “Development has slowed enormously as a result,” says Zhu; “there is also an outright prohibition on purchasing a third property in a bid to halt speculation.”

James Macdonald of Savills China agrees: “There has already been an impact in terms of falling transaction volumes and price growth diminishing,” he says. “Our forecast this year is that prices could fall by 5 per cent. However, the long-term growth story remains true and the restrictions are not expected to remain in their current form for a prolonged period.”

But expats wishing to invest in the memory of Old Shanghai can now buy old lane houses and villas in the former Concession, provided they are not of cultural or historical significance to the Chinese. “Expect to pay an average £1.5m for a 180-sq metre, three-storey walk-up lane house with garden,” says Wood. “Then you have to modernise it. That equates to $1,200 per sq foot, unmodernised, against $1,500 per sq foot for a new, top-quality condo in New York.”

Bear in mind too that there is no freehold in China, and the maximum lease in Shanghai is 70 years. “Nobody owned property in China 30 years ago,” says Patrick Cranley, “so nobody knows what will happen at the end of the term.”

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Buying guide

Pros

● Vibrant expat community and restaurants

● Good career prospects

Cons

● Pollution and limited access to countryside

● Language barrier

What you can buy for

£100,000: a one-bedroom 60-sq-metre flat on the outer ring, eight miles from centre

£1m: a one-bedroom apartment (92 sq metres) in Casa Lakeville

Savills, tel: +86 216391 6688, http://en.savills.com.cn

Tomson Riviera, tel: +86 215888 5678, www.tomsonriviera.com

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