Apartment Hunting in Shanghai

Before you start looking for an apartment anywhere, the first step it to set your budget.

I was also quite surprised to find that rents for newer (built after 2008) building are significantly higher than for buildings that are just slightly older. The reason, is due to the amount that the land lord paid when purchasing the apartment. For example, if the land lord paid 50,000 RMB/m²
2 because the unit was purchased after 2008, you can probably find a 2005 unit of identical location and near identical quality for about half the price, as the land lord would have only paid 25,000 RMB/m².

Obviously there is a status benefit, particularly important in China, associated with the higher rent location – but if you’re simply looking for a great location and a great value, you’re best of looking for someplace built between 2000-2005.

Next, DO NOT GIVE UP, DO NOT GET DISCOURAGED. Each time I’ve found an apartment that I really liked, I searched for two weeks, looking at 50 different apartment units, before finally settling on one that I like. No single agent will take you to so many places, but there’s an easy work around.

First, decide approximately which neighborhoods you would consider living in, probably something in proximity to your work, your social circle, or your preferred transit option, and then walk around on the neighboring streets looking for real estate agents. Agencies are local, and even though they can access their shared database throughout the city, they’ll often have the key to the units you want to see at an office near by.

These are the obvious things – what about not so obvious things.

1. HEAT SITUATION

Shanghai is extremely cold in the winter. If you haven’t lived here yet for an entire winter, you really have no idea how cold it gets. Most importantly, when you’re outside with heavy clothes the Shanghai winter is OK, but when you come home, stop moving and remove your down jacket, you’re in for a horrible surprise. Shanghai has high humidity, between the low temperature and the wind, it’s possible that you’ll never feel warm at home.

First thing, make sure that you’re apartment has THERMAL PANE (double pane) windows. I’ve found some amazing apartments with beautiful views, but rooms full of big, sliding, single pane windows provide approximately zero insulation value.

My advise, forgo the most breathtaking, all glass walls, in favor of more moderate window placement.

If you can find a place with either heated floors (地暖) or boilers/radiators (暖气), then you’ve hit the jackpot. These systems burn natural gas (煤气) so while they provide heat that doesn’t dry the air, they also will save you thousands of RMB/month if you leave the heat on.

2. TAX RECEIPT (发票)

Depending on your personal situation, you may or may not need a tax receipt. If you do not need one, expect to save about 5%, or conversely, if you do need one, expect to add 5%. For rental properties, there is no “standard” of whether or not a tax receipt is or is not included in the asking price. You need to inquire.

3. ASSOCIATION FEE (物业)

Under normal market terms, the association fee (物业费) is to be paid by the landlord, not by the tenant. If the land lord wants to fight about who is responsible for the association fee (物业) then you’ve probably found a real cheapskate and will probably run into other problems down the road.

Normally you will only be responsible for: Water, Electricity, Gas and Internet (水电煤及宽带).

4. WENZHOU PEOPLE (温州人)

Throughout Shanghai, a large percentage of the landlords are from Wenzhou. Almost all are absentee landlords and they generally take zero pride in maintaining a quality apartment, or providing a fair value. They are generally real estate speculators, and are generally horrible land lords. If anything breaks, do not expect your Wenzhou land lord to do a respectable job making repair.

On the other hand, land lords that have an overseas connection are generally fair and win-win oriented. The stronger that overseas connection, the better I’ve found it is to work with them.

Bottom line, if the land lord is from Wenzhou, a big minus. If they went to school overseas, a big plus.

5. WHY NOT THREE YEAR?

Whenever possible, I would recommend signing a three year contract. Inflation in China, particularly in Shanghai is out of control. Signing up for a longer contract is beneficial for the land lord, they know that the apartment is not at risk of sitting empty, but more importantly, it protects the tenant against annual rent increases. Use a longer term as negotiating leverage to get the lowest possible price, and lock in that price for as long a period as reasonable.

Moreover, if you know you’ll be in a unit for three years, it’s reasonable to make some improvements to the unit, without being concerned that you’re simply giving your land lord leverage to raise the rent a few months later.

For example, if you sign three years, and spend 20,000 RMB on repairs, that only works out equivalent to the land lord raising rent by 555 RMB/month.

You’ll also save paying out the AGENT FEE if you decide to move.

6. AGENT FEE (中介费)

Agencies try to hold off discussion of their fee for as long as possible. For the agency, their preferred arrangement is: landlord pays 1-month rent to agency as referral fee plus, tenant pays 1-month rent to agency as finders fee

I’ve even heard of cases where the tenant is to pay 2-months fee to the agency, but I would suggest you walk away immediately if your agent tries something like that.

The best case scenario is that the landlord + tenant combined pay 1-month of rent to the agency.

As the tenant, the lower you can negotiate the fee, obviously the better. Depending on your style, you may or may not want to negotiate it up front. If the agent that showed you a unit that you happen to really like seems to not be operating in your interest, and tries to charge you more than 50%-month worth of rent, then you may consider telling one of the other agents that you’ve been working with about the community/building/unit number, and they can look it up and broker it for you. This is a bit devious, so you should only resort to this sort of thing if your agent is simply doing the minimum amount of work possible and not working in your best interest.

It’s also important to understand exactly what the agency is responsible for delivering. There are a lot of lazy agents that simply pick a few nearby units that seem to be at the top of your price range (therefore maximizing their commission), take you for a quick look, and pressure you to sign the contract.

There are also excellent agents that will spend hours going through the listings databases plus their own network of contacts to find a unit that really matches what you’re looking for.

Some agents provide amazing after sales service. If there is a problem, you call them, rather than the landlord, and they will help you to resolve it. If there is some repair or customization that you would like to do, they’ll help find people to do it.

Finding a hard working, intelligent agent makes a big difference.

7. NOT FOR SALE

Sometimes an apartment gets sold right out from under a rental tenant. You should ask the rental agency if this apartment has ever been listed for sale before signing a contract. If the apartment was listed for sale, then the owner isn’t committed to holding onto the property and you are at high risk of having it sold out from under you.

The ideal situation is to have a clause written into the contract that IF the unit is sold: Damages (赔偿) some specifically defined amount of money should be paid out to you if the unit is sold Notice (通知) in addition to damages, you need to be notified at least X amount of time before sale

Best of luck trying to get the “no sale” clause added to the contract. Standard is about 30 days, and as long as the apartment hasn’t previously been listed the risk is low, but at least it gives you a bargaining chip to use with the land lord.

8. INTERNET: Slow or Slower?

Most apartment units in Shanghai only have 1MB or 2MB “broadband” connections, but some units quality for 10MB connections. If you use the internet extensively, it’s worth giving China Telecom (中国电信) a call at 10000 (一万) and asking which type of service is available in the unit that your considering.

9. Utility Bills

When handing over the keys, the land lord should give you the most current utility bills (water, electricity, and gas) and explain the current account situation. If the bills are not yet paid, then you can deduct that amount from your rent and pay it to the utility company. If the bills are over-paid, then your expected to pay the difference to the land lord.

10. Apartment Inventory

Normally all apartments in Shanghai come furnished, so the land lord will provide you with a printed sheet showing each of the items that they have provided (ie. tv, refrigerator, microwave, bed, etc), a bit like a physical inventory sheet for a warehouse. You’re responsible for making sure all of these items are retuned to the land lord when you leave, else it will be deducted from your deposit. If you want to get rid of any items in your apartment, make sure that your land lord has some location where they can be stored. Often times the land lord does not have any such location, so if you have a lot of possessions of your own to bring in, be careful to avoid apartments that are “over furnished”.

11. Payment Terms

Normally all apartments in China are “Pay Three, Deposit One” (付三押一) meaning that on day one, when you want to get the keys, you’ll need to bring cash for four months worth of rent, plus the fee payable to the agency. The agency fee could be as low as 25% of one month, and as high as 200% of one month. Also, the higher the monthly rent, it has a big impact on the actual amount of money that you need to turn over to get the keys.

12. Getting started

There are lots of websites that you can use to research possible apartments, but be advised that the “for rent” pages of these sites are full of bait-and-switch tactics, outright lies, and stale listings that have already been listed. Consider the risks when looking online, and once you zero in on a few areas that you like, just look for the actual real estate broker offices in that area.

Websites that you can use to get started include:

There are also english language oriented services, but I would avoid these unless your not concerned about paying a premium price for an agency fee.

Considering the difficulty of parking in the city and driving around rush hour, I recommend forgoing the automobile all together and simply finding a location with great subway access. By great, I mean less than 2 minutes walk to the station, which is less than the normal walk to find the parking structure. If you take this approach, a few stations that you might start focusing your search around are:

  • Line 1 – Xinzha Rd (新闸路站)
  • Line 8 – Laoximen (老西门站)
  • Line 9 – Xiaonanmen (小南门站)
  • Line 9 – Madang Rd (马当路站)
  • Line 10 – Xintiandi (新天地站)
  • Line 10 – South Shaanxi Rd (陕西南路站)

Of courses there are many many places to choose from, but these are a few of the more centrally located places that still have very good subway access to nearby communities.

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