Construction cranes are familiar sights across Shanghai but even set against this city’s frantic pace of development, the plans for its prestigious waterfront are ambitious.
The Bund is a strip of 19th- and early 20th-century grand banking offices and wharves lining the western bank of the Huangpu river, directly opposite the ultra-modern skyscrapers of Shanghai’s Pudong financial quarter.
Although one of Shanghai’s oldest surviving addresses – many of the Bund’s buildings were created by Britain and America 120 years ago and became trading houses and consulates – the area deteriorated under Mao Zedong and a motorway separated it from the water.
But the Bund became the focus of developers’ interest just before 2000, and since then there has been an air of permanent revolution about the place. The breakthrough event was the opening of M On The Bund by an Australian restaurateur in 1999, hosting literary and fashion events as well as dining guests like Rupert Murdoch.
More building transformations followed. In 2007, work started on the three-year, £50m renovation of the Peace Hotel, a 13-storey art deco creation from the 1920s. Then a three-year redesign of the Bund’s public realm was completed in 2010: roads were diverted underground and a long pedestrian riverside walk created, ending at a new park and allowing tourists to admire the growing Pudong skyline across the water.
But if that sounds like a dramatic symbol of Shanghai’s elevation from colonial trading hub to global financial centre, it is nothing compared with what is going to happen next. By 2020 there will be a new business quarter and cruise liner port created in the north Bund, involving an estimated 30 new-build towers; meanwhile the south Bund will see the conversion of more than 100 historic buildings into offices, shops and luxury apartments. The scheme will create a total of 67.5m sq ft of floor space – by way of comparison, Beijing’s Bird’s Nest Olympic Stadium occupies just one million sq ft.
Some of the Bund redevelopment is being undertaken by national companies such as China Resources Land, as well as international developers including the New York-based Rockefeller Group International, which is working in a joint venture with the Shanghai New Huangpu Group, a privatised Chinese company.
The redevelopment is considered to be a move by the city’s authorities to ensure the historic western side of the Huangpu is not overshadowed by modern Pudong on the east, which is designated by the national government as a special economic zone and dominated by corporate headquarters, hotels and residential compounds.
Pudong has become popular thanks to transport improvements, notably the creation of 10 bridges and 15 tunnels linking it with downtown Shanghai, plus the construction of more than 20 Pudong metro stops. Some international schools have opened satellite operations there, too.
Although most new space on the Bund will be commercial, a so-far undisclosed number of high-end apartments will also be constructed; the first, in a scheme called The Bound of Bund, are under way. “Most buyers are local rich Chinese. The price ranges from £780 to £1,070 per sq ft,” says Larry Hu, Shanghai residential director for Knight Frank.
Many of the units purchased are being rented. Fullhome Real Estate, a Shanghai agency, is letting a 2,000 sq ft three-bedroom apartment in the Bound of Bund for £3,050 per month.
“The Bund view remains the biggest selling point,” says James MacDonald of Savills’ Shanghai office. As a result, these sales and rental values are high, even by Shanghai standards.
Part of the Bund redevelopment’s appeal is that it will create homes in a part of the city where currently few homes are on the market at any one time. The small number on sale now includes a 2,000 sq ft north Bund “bare shell” luxury apartment for £809,000 through estate agency Villable. Meanwhile China Real Estate is selling 3,000 sq ft Bund apartments constructed in 2006 – some with parking spaces – for £1.02m.
Property consultancy Colliers International says the city’s average residential sale price rose 6 per cent in the year to April 2013 to £226.50 per sq ft, with high-end homes away from the Bund reaching about £800 per sq ft. In March 2013 alone, some 12,700 new Shanghai homes sold across all sectors of the market; a 40-month peak.
However, much of this surge has been attributed to purchasers attempting to avoid anti-speculation measures being introduced by China’s government over the next six months. These include a 20 per cent capital gains tax, larger deposits for new homes, and higher mortgage interest charges.
As a result of the clampdown, “Shanghai’s luxury residential projects will likely see a decline in sales volumes and prices in the second quarter of 2013”, with “a fundamental shift in the primary source of demand to first-time and upgrading buyers,” predicts a Colliers investment report. The firm believes authorities will levy capital gains tax and other anti-speculation initiatives at second-home purchasers rather than owner-occupiers.
Which makes investment unattractive for foreigners, even if they are willing to tackle the Chinese bureaucracy. “It’s not easy to repatriate profits. It’s legal [but] it’s just that foreign currency transactions require a lot of documentation, and must be done in person,” says Michael Klibaner of Jones Lang LaSalle’s Greater China.
Buying a home near the revitalised Bund is likely to be a Chinese affair, but “there’s still a lot of money looking to invest and this is unlikely to change,” insists MacDonald of Savills.
In other words, Shanghai’s redevelopment revolution continues apace.
● Foreigners may buy only one property and must have worked in China for a minimum of one year
● There were 33,200 ‘criminal activities’ in 2012 according to Shanghai People’s Procuratorate with increases in fraud, online scams, counterfeit money and tainted meat
● Day-time temperatures are typically 40F in January and February but can reach 95F for short periods of July and August
What you can buy for …
£500,000 A two-bedroom apartment in a Qinpu suburb gated development
£1m A new two-bedroom apartment near the Bund
£5m Two penthouse apartments in Pudong skyscraper with Bund views