Hedge Your Bets

CW:How is the real estate market being affected by the Global Financial Crisis?

Joanna Tan: It's not as severe as people imagine. People have been expecting large price reductions, but it actually hasn't been that much, about a 5-10 percent drop in expat compounds and developer properties, though some are maintaining the same prices. Individual landlord properties are dropping a bit more. The small drop is actually encouraging people to move to the larger rental properties.

So has there been a decline in new rentals?

I haven’t seen a lot of new rentals, but right now it’s hard to tell since it’s right around the end of the year. We’ve spoken to a lot of companies and the major companies are still sending people over--American companies maybe less than European companies which appear a bit more stable at the moment.

What's being affected more, rentals or purchasing?

The government has been creating incentives--tax benefits, loosening property restrictions—and may provide more to encourage purchasing, and foreign companies aren't going to abandon their investments in Shanghai. If the government incentive plans work, people don't lose jobs and there are no major social security problems, I don't think prices will drop that much. Rentals will be the same, but right now it's still quite uncertain.

So, is this a good time to buy or rent, or not?

For rentals, it's definitely a good time to negotiate prices. You have to utilize this time of uncertainty. Once the situation clears up, you won't have as much bargaining power. For purchasing, I suggest people wait and see. Watch the market closely. When it starts to gradually turn up, then you know prices are as low as they're going to get.