Recently, the leading real estate developer Keppel Group in Singapore sold its Shanghai landmark building, Pudong Plaza, at a 35% discount. Mainland Chinese people are saying that foreign investors have lost confidence in the Chinese economy.
Pudong Plaza is located in the prime financial district of Lujiazui, right across the street from the Shanghai World Financial Center and the Shanghai Tower. It was reported that parking fees in the area can reach up to 80 yuan per hour (approximately 11 US dollars).
Originally owned by the Shanghai Guosheng Group, the Pudong Plaza project was a major investment platform for the Shanghai municipal government. In 2008, Guosheng Group began to divest its real estate business. Ultimately, HNA Real Estate acquired 100% equity of the Pudong Plaza project company and 721 million yuan (approximately 100 million US dollars) in debt. In 2019, Singapore’s Keppel Group, in partnership with a foreign fund, established a joint venture and acquired Pudong Plaza from HNA Real Estate for 2.752 billion yuan, marking Keppel Group’s entry into the core commercial district of Lujiazui in Shanghai.
Since the beginning of this year, Keppel Group has been continuously selling its assets in China. On January 27, Keppel China Trust, a subsidiary of Keppel Investment, announced the successful sale of Keppel MALL Shuangjing Shopping Center near the East Third Ring Road in Chaoyang District, Beijing, for 842 million yuan (approximately 116 million US dollars).
On January 31, Keppel Group announced another joint venture with Prudential Life Insurance Limited. Keppel Investment sold 95% equity in the Keppel Star Trade project in Beijing to Prudential Life, retaining the remaining 5% equity, in a deal worth nearly 2.4 billion yuan (approximately 330 million US dollars).
In October, Keppel Group also sold its apartment project in China. Its Ascott Trust has agreed to sell a serviced apartment in Tianjin to an undisclosed third party. The transaction is expected to be completed in the second quarter of 2025.
The last sale for Keppel Group this year was the recent sale of Pudong Plaza.
In response to this, a Shanghai resident, Zheng Zhaolin (pseudonym), told Epoch Times that the Lujiazui commercial district is currently very deserted, with more salespeople than customers. “In previous years, as the Chinese New Year approached, this place would be bustling with locals buying goods for the holiday and migrant workers preparing to go home and buy gifts. Payment lines were long. But now Shanghai is very bleak. Many foreign investors would rather lose money than stay in China because they cannot see a promising future here.”
Zheng Zhaolin also mentioned, “In the past, when you were tired of shopping, you could easily find a restaurant to dine in. There were Japanese cuisine, regional Chinese delicacies, and even movie theaters upstairs. It was very convenient. Now, finding a restaurant to eat in is difficult. Many shops have closed down. The office buildings upstairs are nearly empty, and many small and medium-sized enterprises can no longer operate. The outdoor squares are no longer bustling with various events. The whole area looks unusually quiet.”
At the end of September, the People’s Bank of China launched a series of measures to stimulate the real estate market, including interest rate cuts, reserve requirement ratio reductions, down payments reductions, and reduction of existing house mortgage rates, aiming to stabilize housing prices and revitalize the real estate market, but the effectiveness seems to be limited.
With the continuous efforts of the real estate market policy at the end of September, the property market briefly warmed up in October. According to data from the Ministry of Housing and Urban-Rural Development, the volume of new residential sales nationwide in October increased by 0.9% year-on-year, the first growth after 15 consecutive months of decline since June of last year; the volume of second-hand housing transactions increased by 8.9% year-on-year. The total volume of new and second-hand housing transactions increased by 3.9% year-on-year, also the first increase after eight consecutive months of decline since February this year.
However, the good times did not last long. According to statistics from the China Index Research Institute, in November alone, the sales of the top 100 real estate enterprises on the mainland decreased by 9.46% compared to the same period last year, and by 18.62% compared to October. From January to November, only 9 of the thousand-billion-yuan real estate enterprises remained, a decrease of 7 compared to the same period last year, and 76 hundred-billion-yuan real estate enterprises, a decrease of 32 compared to the same period last year.
According to Wind data, the number of properties listed for auction by banks reached 105,058 units in October, the highest since August 2021, surpassing 100,000 units for the first time.
Liu Yi (pseudonym), a former media professional from mainland China, told Epoch Times that three years of zero-COVID policy have disrupted normal societal functions, exacerbating unemployment rates. This year, over ten million university graduates cannot find jobs, and the authorities are encouraging them to work in household services. The poor are becoming poorer, and the middle class, burdened with mortgages and car loans, is sinking to the level of the impoverished, afraid to spend.
“Through the epidemic, many people have seen the true face of the Chinese Communist Party. After the lockdown, the wealthy have started to flee through investment immigration, taking away a large amount of capital. Meanwhile, many people without money are fleeing with their families.”