Twin Peaks?
TO A CERTAIN KIND OF PERSON, nothing is more exhilarating than climbing up 26 flights of stairs on a dusty construction site as the day wanes. Atop the embryonic high-rise, after all, is a stunning view of Shanghai's cosmopolitan skyline, now pricked with electric lights. And even if only wind is audible just now, the "ka-ching!" of cash registers rings loud in the imagination. Apartments in buildings like these fetch as much as $10,000 a month. The renters often are foreign executives, sent by the scores of overseas companies hoping to get a chunk of China's enormous domestic market.
This particular penthouse is in Xintiandi, a luxurious development in the French Concession district that mimes Old Shanghai sometime between the French arrival in 1847 and the appearance of Mao's army in 1949. Although brand new, Xintiandi looks antique and harks back to Shanghai's heyday, when it was home to Asia's biggest skyscrapers and most sophisticated inhabitants. Trudging up the stairs this chilly March evening are two potential investors -- Shu Yin Lee, on leave from his job at J.P. Morgan, where he developed a devoted following among the American fund managers who specialize in Asian stocks, and Jamie Rosenwald, a Los Angeles hedge-fund manager. Their willingness to hoof it to the top floor astounds local brokers accustomed to foreigners eager to plunk down cash for apartments, sight unseen.
It's perfectly understandable to Lee, who has set up a base on Shanghai and is devoting himself virtually full time to investing in Chinese real estate. The two longtime friends, who met when Lee sold South Korean stocks to Rosenwald a decade ago, have invested together for years in apartment buildings around Los Angeles. That yielded nice profits.
But Lee is even more sanguine about China. Although he thinks property prices are likely to stay flat this year in Shanghai -- partly owing to severe acute respiratory syndrome and the breakneck pace of building -- the outlook for capital appreciation looks promising. "Do multinational companies need to go to Shanghai, get more global, come to terms with China?" he muses. The answer is obvious. And that's just the beginning. "Over time, how desirable will these properties be to the local Chinese?"
The answer isn't so obvious to China's government, which has in recent months cracked down on property developers, in part because it's worried about overheating in the Beijing and Shanghai markets.
Entrepreneur Zhou Zhengyi, who controls two publicly traded property companies, Shanghai Land Holdings and Shanghai Merchants Holdings, through his holding company, Nongkai Development Group, was recently arrested on charges that he obtained questionable loans via shell companies. Shares of the two promptly collapsed. The scandal also led to an investigation of Liu Jinbao, former head of the state-controlled Bank of China in Hong Kong, and a probe into the bank's loans to Zhou. To many, it shows how government connections can swiftly sour. That's why some investors steer clear of Chinese property.
As Sam Lieber, chief executive of Alpine Management -- which invests in real estate worldwide -- cautions: "The government gets involved in the business, but lack of transparency is really the issue. You can buy into the best market in the world, but unless the company works for you or with you, it's difficult."
Then there are myriad problems with home ownership in Shanghai. A single mansion, dating from colonial days, might be jointly held by 10 families. Don't forget the booms and the busts. China is drawing at least $50 billion a year in foreign direct investment, with much of that going to real estate in Shanghai (viewed by many as poised to overtake Hong Kong in importance). After all, Shanghai has liberalized its market, allowing foreigners to buy or lease nonresidential properties. But even in Shanghai, rents have declined since the mid-'Nineties, as a construction boom added new space. And luxury residential prices are a quarter lower than they were, even though construction quality has improved markedly. Meanwhile, the state owns all land, making values for publicly traded companies tough to assess. And Chinese real estate is a fragmented business. J.P. Morgan estimates that the top 10 developers in each of China's four major cities accounted for just 16% of total market share in 2002.
There are plenty of Hong Kong-traded companies with exposure to China; Shui On Holdings, which developed Xintiandi, is associated with publicly traded Shui On Construction & Materials. There are a handful of publicly traded pure plays that develop properties on the mainland, and the shares of many have jumped since the SARS crisis began to abate last month. Some of the bigger names: China Vanke, China Overseas Land, New World China Land, China Resources Land, Hopson Development Holdings and Shanghai Real Estate.
Last week, Beijing Capital Land, the state-owned property developer in China's capital, raised money from foreigners in Hong Kong's first big initial public offering since the SARS crisis began. The listing comes after offerings by two real-estate developers -- Shanghai Forte Land and Soho China -- were shelved.
Fang Zheng, the China specialist at Neon Liberty Capital Management, a New York hedge fund that focuses on emerging markets, is cautious on Chinese property plays for the short term because of the Zhou Zhengyi scandal. But he's bullish long term, citing "increasing purchasing power and the increase in the middle-income class in China." Zheng owns shares of China Overseas Land, which trades at 0.4 times book, and lauds it for its diversified portfolio and fat reserves against any decline in its Hong Kong property holdings. And while China Vanke is too pricey for Zheng at 1.3 times book, it's "potentially a core holding, one of the best- managed property companies in China, with a strategy of building quality affordable housing."
Lee and Rosenwald for years sought to cash in on China's extraordinary growth, but found few well-managed companies to buy that weren't listed in Hong Kong. They wanted to focus on hard assets in local currency, particularly because the renminbi, pegged to the U.S. dollar, seems dramatically undervalued to many people and may be revalued upward. High-end expatriate housing was appealing, at least in part because the two had seen the explosion in prices of such property in Tokyo in the 1980s.
In 2001, when Shanghai became the first mainland city to open its residential market to foreigners, the two took notice. Grand River Properties took shape as a partnership that would invest directly in luxury apartments targeted initially at expats, and then at wealthy Chinese. Experts think there are at least 100,000 expats in Shanghai with official residence permits, not including the Taiwanese or Hong Kong Chinese. Says Sharon Landon, managing director at Cross Cultural Exchange, which helps expats get acclimated: "There's a continuing stream of people coming into Shanghai, looking for new opportunities in this dynamic city."
Lee is one. His father, a former spice trader, and his mother, whose family owned a peanut-oil business, fled China for Hong Kong after the revolution, then emigrated to the U.S. when Lee was eight. Lee grew up on Long Island, speaking Cantonese and English, then studied art history and chemistry at Stanford. As he traveled through Asia after college, family friends in Hong Kong suggested he get into the brokerage business. Along the way, he acquired a certified financial analyst designation, an MBA, and Mandarin. At 36, Lee has an ironic sense of humor and watchful eyes. He's ready with a sensible observation, a reassuring remark and often, a knowing quip. Investors trust him.
Grand River is starting off slowly, Lee acknowledges. The first tranche has raised under $1 million, although more commitments come in by the day. Grand River has signed just two properties, both in Xintiandi, where prices range from $200 to $300 per square foot -- roughly 70% cheaper than comparable properties in New York or London. Lee hopes that Grand River will own as much as $20 million of real estate by the end of its first year. Prices haven't come down as he'd hoped, and he figures returns (after management fees and the like) might be just 5%, for now. But Shanghai property prices are still a long way from where they were in 1993, when average rents neared $50 a square meter, versus about $25 now, according to FPDSavills Research. Says Lee: "We're looking at this property venture with a five-year horizon, at least."
An early investor in Grand River is Gerald White, founder of Grace & White, a New York value-investment firm. Grand River is White's single personal investment in China, because White has "no confidence" in the accounting and corporate governance of Chinese stocks. Still, he ticks off the advantages. "Apartment prices in Shanghai are roughly a third of [prices in] New York, and there's a tendency for prices to equalize in major financial centers. The rental returns are okay, but you invest for capital appreciation. This is the way to play the growth of the Chinese economy."
致命诱惑：上海地产市场
对于某一种人来说，再没有什么事情比夜幕降临时爬上一个满是尘土的建筑工地的26层楼更令人愉快了。毕竟，站在这座尚未完工的高楼顶上，是观赏上海这个灯火通明的国际大都会轮廓的绝佳角度。即使现在只听得到风声，但收银机的喀嚓声还是响彻脑际。这种大厦的套房每月租金高达1万美元。房客一般是被许多海外公司派驻到中国的外籍管理人士，试图在中国巨大的国内市场分一杯羹。
这些特别的高档住宅位于上海新天地(Xintiandi)，这是在原先的旧上海法租界开发的一个豪华地产项目。尽管是一个全新的项目，新天地看起来却有古典风格，令人回想起旧上海的全盛时期，当时这里云集了亚洲最雄伟的高楼大厦和最为混杂的居民。在3月份的一个寒冷夜晚登上这栋楼的是两位潜在的投资者Shu Yin Lee和Jamie Rosenwald。他们是老朋友。在JP摩根(J.P. Morgan)任职的Shu Yin Lee当时正在休假，在这家公司工作期间，他在专门投资亚洲股票的美国基金经理中发展了一批忠实的追随者，而杰米?罗森沃德(Jamie Rosenwald)是洛杉矶的一位对冲基金经理。他们情愿步行登上顶层的举动令当地的经纪人大吃一惊，他们已经习惯于不看现货就急于付租金的外国客户。
这对Lee来说很好理解，他已经在上海打下了基础，现在正把全部时间用于投资中国的房地产行业。他和罗森沃德相识于10年前，当时他将韩国股票出售给罗森沃德。他们合作在洛杉矶附近投资单元住宅楼已有数年。获得的利润相当丰厚。
Shu Yin Lee愿意等待他在上海的地产投资项目带来真正的回报。
但是Lee对中国市场更加乐观。尽管他认为今年上海的房地产价格将继续疲软－－部分原因是严重急性呼吸道综合症(severe acute respiratory syndrome, SARS, 俗称:非典型肺炎)和过快的住宅修建速度，但资本增值的前景看起来充满希望。他不禁思考，跨国公司需要进入上海、变得更加全球化并与中国签订协议吗？答案是显而易见的。而且这种趋势还刚刚开始。随著时间的流逝，当地人对这些房地产的渴求将达到什么程度？
对中国政府来说，这个问题的答案没有这么明显，最近几个月，政府已经处罚了几家房地产开发商，部分原因是担心北京和上海房地产市场过热。
企业家周正毅通过其控股公司农凯集团(Nongkai Development Group)控制两家公开上市的房地产公司上海地产控股有限公司(Shanghai Land Holdings, 简称：上海地产)和上海商贸控股有限公司(Shanghai Merchants Holdings, 简称：上海商贸控股)，最近他因为被指控通过壳公司获取问题贷款而被捕。这两家公司的股票暴跌。这件丑闻还导致中国银行(Bank of China)香港分行前任总经理刘金宝及该行向周正毅提供的贷款遭到调查。对许多人来说，这表明与政府有关系也可能很快变成一件坏事。这正是一些投资者避开中国地产行业的原因。
正如Alpine Management的行政总裁山姆?利伯(Sam Lieber)所警告的那样，政府涉及这项业务，但缺乏透明度确实是一个问题。Alpine Management投资于世界各地的房地产业务。
在上海，家族持股带来种种问题。从殖民时代开始，一栋大厦就可能被10个家族共同持有。不要忘了繁荣期和萧条期相互交替的道理。中国每年吸引的外商直接投资至少达500亿美元，其中的许多资金被投入上海的房地产行业（许多人认为上海的重要性将超过香港）。
毕竟，上海已经放开了市场，允许外国人购买或租赁非居民房地产。但即使是在上海，从上个世纪九十年代中期以来，租金也一直在下跌，因为建筑业的繁盛使居住空间大大增加。豪华住宅价格比以前下跌了四分之一，尽管建筑物的品质有了明显改善。同时，国家拥有所有土地，使公开上市公司的价值难以评估。而且中国的房地产业务被分割成许多小块。据JP摩根估计，2002年在中国的4个主要城市，居前10位的房地产发展商在当地市场的占有率仅为16%。
许多在香港上市的公司涉足中国大陆业务，开发上海新天地的瑞安集团有限公司(Shui On Holdings)就与香港上市公司瑞安建业有限公司(Shui On Construction & Materials, 简称：瑞安建业)有关联。还有许多公开上市的纯地产运营商在大陆开发地产项目，自SARS危机从上月开始减退以来，其中许多公司的股价已经跃升。较大的这类公司包括：万科企业股份有限公司(China Vanke)、中国海外发展有限公司(China Overseas Land, 简称：中国海外发展)、新世界中国地产有限公司(New World China Land, 简称：新世界中国)、华润置地有限公司(China Resources Land, 简称：华润置地)、合生创展集团有限公司(Hopson Development Holdings, 简称：合生创展)和上海置业有限公司(Shanghai Real Estate, 简称：上海置业)。
上周，北京的国有房地产公司首创地产(Beijing Capital Land)通过在香港市场首次公开募股(IPO)吸引外国投资者的资金，这是自SARS危机爆发以来香港的第一个大规模的IPO。在该公司上市前，两家房地产发展商上海复地（集团）股份有限公司和Soho China的IPO计划被搁置。
受周正毅丑闻影响，纽约的对冲基金Neon Liberty Capital Management的中国市场专家郑方(Fang Zheng, 音译)对中国房地产企业的短期前景持谨慎态度。该基金关注新兴市场。但是他看好长期前景，原因是中国人的购买力不断提高以及中产阶级的队伍不断扩大。他持有中国海外发展的股票，该股的价格与帐面价值比为0.4倍，他对该公司多样化的投资组合以及充足的拨备（为了预防其拥有的香港房地产项目贬值）表示赞赏。虽然万科企业股份有限公司1.3倍的价格与帐面价值比对他来说有些过高，但他认为该股可能成为核心持股，它是中国管理水平最高的房地产公司之一，公司的一项策略是建造高品质而且人们买得起的住宅。
Lee和罗森沃德数年来一直寻求在从中国经济的高速增长中获益，但他们发现很少有管理良好而又不在香港上市的公司股票可买。他们希望将投资重点放在以当地货币计价的硬资产上，很重要的一个原因是，对许多人来说，人民币的价值似乎被明显低估，其估值可能会被上调。他们认为，针对驻中国的外籍人士的高档住宅很吸引人，至少部分原因是他们曾经看到这种住宅的价格在上个世纪八十年代的东京暴涨。
2001年，当上海成为向外国人开放住宅市场的第一个大陆城市时，他们俩就注意到了投资机会。就这样，Grand River Properties以合夥制的形式诞生了，这家公司将直接投资于豪华单元住宅，这种住宅最初针对驻中国的外籍人士，然后是富有的中国人。专家认为，不包括台湾人和香港人，上海至少有10万名获得正式居住许可的驻中国的外籍人士。帮助这些外籍人士适应环境的Cross Cultural Exchange的董事总经理沙伦?伦敦(Sharon Landon)说，人们还在继续涌入上海，在这座动感之都寻找新的机会。
Lee就是其中的一元。他的父亲（从前是一位香料商人）和母亲（其家族拥有一个花生油企业）1949年后从大陆逃往香港，然后在Lee八岁时移民美国。Lee在长岛长大，会说广东话和英语，然后在斯坦福大学学习艺术史和化学。当他大学毕业游经香港时，他在香港的亲友建议他从事经纪人业务。在这个过程中，他获得了一个注册金融分析师资格和一个工商管理硕士学位，学会了普通话。现年36岁的Lee具有讽刺的幽默感和一双警惕的眼睛。他随时会做出有判断力的观察，发表令人放心的评论，有时还带有心照不宣的双关语。投资者信任他。
Lee承认，Grand River的起步非常缓慢。筹集的第一部分资金不足100万美元，尽管随后又追加了投资。Grand River仅签约购买了两项房地产，都位于新天地，每平方英尺的售价在200到300美元之间－－几乎比纽约或伦敦的同档次房地产便宜了70%。Lee希望Grand River在第一年的运营结束时将拥有价值2,000万美元的房地产。但地产价格并未像他希望的那样下降，他估计眼下的回报率可能仅为5%。但是据FPDSavills Research称，上海房地产价格距离1993年的水平仍有很大差距，当时每平方米的租金接近50美元，现在约为25美元。Lee说，他们至少以5年为一个阶段来考察这个房地产投资企业的业绩。
Grand River一个较早的投资者是Grace & White的创始人杰拉尔德?怀特(Gerald White)。Grand River是他个人在中国的唯一一项投资，因为他对中国股票的会计帐目和公司管理还没有信心。然而，他也列举出了中国的优势。他说，上海的单元住宅价格几乎为纽约的三分之一，而重要金融中心的地产价格存在一种趋于相等的倾向。租金回报不错，但投资的目的是资本增值。这才是从中国的经济增长中获益的途径。
