Brexit and capital control do not deter investments into UK - Sam Crispin

Sam Crispin

Chinese investors are still flocking into the Royal Albert Docks in London, says property consultant Sam Crispin in the South China Morning Post. Doomsday scenario's with rigid capital control from Beijing and the Brexit is not stopping those investments.

The South China Morning Post:

Firms from China, Taiwan, Hong Kong and India have acquired or reserved 60 per cent of total office space, or 33,388 square metres, in the first phase of the Royal Albert Dock project, Sam Crispin, chief executive officer of ABP’s Hong Kong sales unit told the South China Morning Post. 

Costing £1.7 billion (US$2.2 billion), the revival of the 137-year-old dock in East London, seen as the city’s third financial and business district, aims to attract Chinese and other Asian firms looking to expand into Europe. ABP, founded in 2003, is a privately held Chinese developer of economic zones, including the Royal Albert Docks project. 

Beijing’s crackdown on capital outflows and debt-fuelled overseas acquisitions by aggressive conglomerates has not deterred companies interested in moving into Royal Albert Dock, said Crispin, who led PwC’s urbanisation team and real estate business advisory services before joining ABP this year. 

“The concern is where Chinese banks have been lending to fund overseas acquisition, whether that’s a risky thing to do or not, and how future acquisitions will be funded in what’s perceived to be a less risky way,” he said.

The latest State Council directive issued on Friday restricting Chinese overseas investments in property, hotels and sports clubs is likely to have limited impact on the project, Crispin said on Monday, as ABP primarily targets “companies that already have operations in Hong Kong and other Asian countries” and hopes “to attract owner occupiers.” 

Unlike landmark buyers such as sauce maker Lee Kum Kee, which bought London’s “Walkie Talkie” tower in July, potential and existing Chinese buyers of ABP’s project are mostly smaller firms, financed in a less risky way and making “smaller investments that are below the radar” of Beijing, Crispin said.

More at the South China Morning Post. 

Sam Crispin is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more outbound investment experts at the China Speakers Bureau? Do check out this list.  

Why property will remain a safe investment - Sam Crispin

Sam Crispin

The Chinese government tries to curtail irrational investments, but domestic real estate is certainly not at the hackblock, says real estate expert Sam Crispin in Knowledge GKGSB. The government cannot afford to kill the goose laying golden eggs, he says.

Knowledge GKGSB:

Driving the rapid price increase are investors piling into the market. A dramatic stock market rout in 2015 in particular left many seeing property as one of the few secure investment options available on the Chinese mainland. 

“There are few investments products that offer the same degree of security as real estate,” says Sam Crispin, CEO of ABP Investment Management in Hong Kong. China’s banks also see property as a secure bet. 

About half of all new lending in 2016 went into real estate, largely through mortgages with bank loans to developers and homebuyers totaling RMB 26.68 trillion ($3.87 trillion). This was up 27% from 2015, according to data from China’s central bank. Agricultural Bank of China, the country’s third-largest lender by assets, had 82% of its new loans go to housing... 

Property development and apartment sales are also key sources of revenue for local governments, so they have an incentive to keep land sales going. According to the Chinese business magazine Caixin, income from the sale of land-use rights totaled RMB 3.75 trillion ($551 billion) in 2016, nearly 30% of the combined annual income of local governments, with some areas depending on sales for as much as 50% of their revenue. 

“Property is the goose that lays the golden egg,” says Crispin. “They (governments) are dependent on that revenue stream—if they lose it what will take its place?” 

A tense standoff lasted for months as the government grappled with a precedent that had national implications. In late December, it was announced that the Wenzhou leases would be rolled over free of charge, which kicked the issue down the road but left the core issue of ownership rights unclear. 

Such uncertainty, long-term, is a destabilizing factor. “[A bursting bubble] would be catastrophic for the Chinese state,” says Crispin. “The government is in control of land sales, the government is in control of construction, the government basically sets prices by approving the pricing of sales… so it’s the government’s fault if it goes wrong. They have no mechanism to cope with [a crisis].” 

Measures implemented in recent years have tried to cool down the market. These include raising minimum downpayments, which can be up to 80% in major cities, and outright restrictions on home purchasing, for example by making it illegal in some places to buy a second apartment.

More at Knowledge GKGSB.

Sam Crispin is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more political experts at the China Speakers Bureau? Do check out this list.   

The opportunities of sponge cities - Sam Crispin

Floodings and storm are pretty common in China, but since 2015 the concept of so-called sponge cities are developed to mitigate the potential damage. Real estate expert Sam Crispin, director Urbanization of PwC China explores in his article at LinkedIn the opportunities for foreign partnership in developing this concept.

Sam Crispin:

Sponge infrastructure can offer spaces for a range of activity and has potential to improve liveability of cities bringing better quality of life. This in turn can help cities attract and retain talent. As we know from cities like London and New York, the constant influx of talent makes them stand out and compete on the global stage. Most of the Chinese sponge cities cannot expect to compete on that level just yet but they can all find an appropriate way to attract talent by finding their own individual way to make best use of the opportunity. Tourism and convention centres always benefit from a greener environment and tourism is a great way to develop and nurture talent for the service industry. In this way Chinese cities can use new, greener sponge city areas to support their economic growth strategies. 

Benefits may not be leisure and tourism related. Medical clusters, or any other industry that benefits from improved environments to attract investment and talent, can be planned on an appropriate scale for the location. Once you start a medical cluster a whole new supply chain can evolve that later results in bio-tech, pharma and other related high return industries. These are all opportunities for some of China’s Sponge Cities that go beyond water resource management. 

While the term Sponge City may be new, the concept of Sustainable Drainage (UK), Low Impact Development (US) and Water Sensitive Urban Design (Australia) are well established. Where China may have a distinct advantage is in pioneering such large scale systems together with potential for public, private partnership financing. Taken together with Chinese experience of large scale planning and urban development it is time for China’s urbanisation model to become an export across not only the developing world but also to those areas of the developed world looking for a new approach and seeking to link and integrate existing regions and clusters of smaller cities into something more functional and competitive than exists today.

More at LinkedIn.

Sam Crispin is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form. 

 Are you looking for more strategy experts at the China Speakers Bureau? Check out this list.   

Real estate prices will drop, and people will buy - Sam Crispin

Sam Crispin

After twenty years of covering real estate in China, Sam Crispin has seen it all. He is not worried by the recent drop in house prices. "When prices drop, people will buy," the UK-based real estate consultant tells in KBIA.

KBIA:

Sam Crispin, who has spent two decades following China's real estate sector, thinks prices will gradually drop, and people, eventually, will buy. He cites the history behind Shanghai's Pudong New Area, which had huge vacancy rates in the 1990s.

"The whole of Pudong was a bit of a basket case," Crispin says, sitting in an office in the area's Lujiazui financial district, overlooking the cruise ship terminal along Shanghai's muddy Huangpu River. "Fifteen years ago, not many people wanted to make the move, but now we see some of the most desirable, most expensive real estate here in Pudong. It's been a massive success for Shanghai."

Of course, Shanghai is a prestigious, coastal city and a magnet for the wealthy and ambitious, dramatically different from Wuxi. As for Crispin, earlier this year, he moved home to England for family reasons.

He says no one should read too much into this, but he has sold all but one of his properties in China. He says he's looking for better rent revenue.

"I can see the capital growth is slowing and it's time to go and invest elsewhere where there might be better income," Crispin says.

More in KBIA.

Sam Crispin is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Sam Crispin now covers Chinese outbound investments from the UK. Are you interested in more experts on China´s outbound investments? Do check out our recent list. 

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Mixed messages from China´s real estate - Sam Crispin

Sam Crispin

Follow the lead given by the government, is the key advice by real estate expert Sam Crispin. The market gives mixed signals, where some property developers do well, and others go down. But the government will stay in charge. A report by CKGSB Knowledge.

CKGSB Knowledge:

In reality, the outlook is mixed. Smaller developers are more exposed to market swings than their larger rivals, and are facing ever-tighter liquidity conditions. A period of accelerated consolidation seems likely—though just what shape it takes will depends on how both developers and policymakers respond. “You see the results of the Chinese developers listed in Hong Kong, and they tend to be doing pretty well. But at the same time, you’ve got smaller developers defaulting on bonds or cutting prices,” says Sam Crispin, a longtime China property analyst based in Shanghai. “That suggests there’s a real issue here.”...

“The question is: where have all the buyers gone?” says Crispin. “Because there’s seemingly not as many buyers out there in some places as there used to be.”...

Many developers are keeping an eye on the planned national property registration system in particular. The platform, which will allow authorities to track the home purchases of any individual and their family members, is due to be in place by 2018. “It’s a very powerful tool,” says  Crispin. In theory, it could allow watchdogs to sniff out when an official or wealthy individual owns a piece of property far more valuable than what their official salary could afford. Yet similar systems are already in place, suggesting the announcement is more about signaling to property owners to clean up their act. “This must be a warning,” says Crispin. 

“‘You’ve got three or four years before this system is in place—so do something about it.’” Crispin thinks the effect will be softer prices in the market for the next three to five years. If that scenario does play out, it is likely to accelerate the trend among developers to focus more on mass-market homes—small and mid-sized homes aimed at middle-class consumers. These projects are less profitable than the luxury condos, says Leung of Moody’s. But developers have already been increasing their proportion because the luxury market is faltering. 

In any case, developers will probably continue to focus on mass-market homes because Beijing wants them to, argues Crispin. If they wish to avoid Xingrun’s fate, falling into line with government policy may prove equally important. 

“I think there’s a realization from developers that if they are aligned with government policy, then they will get more support from the state, including state-owned banks, land auctions, and so on,” says Crispin. “And if they don’t, then sorry, it’s bye-bye.”

More at CKGSB Knowledge.

Sam Crispin is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form. Sam Crispin recently moved from Shanghai to the UK, to focus on outbound Chinese investments, in his case mostly in real estate. 

Are you interested in more experts at the China Speakers Bureau on China´s outbound investments? Do have a look at our updated list. 

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China´s real estate: no panic needed - Sam Crispin

Sam Crispin

Government interference, dropping prices, dropping occupation rates: China´s real estate has always been good for some panic in the media headlines. But there is no reason for panic, says real estate expert Sam Crispin with 20 years of China experience under his belt in GPB News, although some diversification is in order.

GPB news:

Sam Crispin, who has spent two decades following China's real estate sector, thinks prices will gradually drop, and people, eventually, will buy. He cites the history behind Shanghai's Pudong New Area, which had huge vacancy rates in the 1990s.

"The whole of Pudong was a bit of a basket case," Crispin says, sitting in an office in the area's Lujiazui financial district, overlooking the cruise ship terminal along Shanghai's muddy Huangpu River. "Fifteen years ago, not many people wanted to make the move, but now we see some of the most desirable, most expensive real estate here in Pudong. It's been a massive success for Shanghai."

Of course, Shanghai is a prestigious, coastal city and a magnet for the wealthy and ambitious, dramatically different from Wuxi. As for Crispin, earlier this year, he moved home to England for family reasons.

He says no one should read too much into this, but he has sold all but one of his properties in China. He says he's looking for better rent revenue.

"I can see the capital growth is slowing and it's time to go and invest elsewhere where there might be better income," Crispin says.

Seems like a good time to diversify.

More in GPB news.

Sam Crispin is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Sam Crispin recently moved from Shanghai to the UK, to focus on outbound Chinese investments, in his case mostly in real estate. Are you interested in more experts at the China Speakers Bureau on China´s outbound investments? Do have a look at our updated list.   

Related articles

• Sound Familiar? "Overbuilding, Inflated Prices and Almost No Local Demand."
• Pudong proves real-estate pundits wrong - Sam Crispin
• China's Booming Real Estate Market Finally Begins To Slide
• China's home owners full of confidence - Sam Crispin
• Big Four China trouble needs diplomatic steps - Paul Gillis

Pudong proves real-estate pundits wrong - Sam Crispin

Sam Crispin

Ten years ago real-estate expert Sam Crispin was seen by his peers as a contrarian, with a bullish report on the Shanghai mega district Pudong. Today Pudong has become a convincing success of what was erstwhile seen as state-engineered lunacy, Sam Crispin tells in the Wall Street Journal.

The Wall Street Journal:

Sam Crispin's bullish reports on Pudong a decade ago made the property analyst a contrarian. 

Now, as director of China real estate at PricewaterhouseCoopers LLC, Mr. Crispin says growing talk about China's unoccupied "ghost cities" reminds him of the doubts many had about Pudong. "A lot of the commentary frankly was quite similar to the ideas that are being bandied about for the property market today," he says. "The reasoning is quite similar—who's going to occupy all those buildings?" 

Mr. Crispin argues that the lesson of Pudong is how badly Chinese demand was underestimated. Real-estate development, he says, tends to produce "sensationalist" viewpoints. 

Within weeks of Mr. Deng's 1990 endorsement, the government unveiled a blueprint and earmarked billions of dollars to pay for it.

More in The Wall Street Journal.

Sam Crispin is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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