Alex Ahlstrom
I am in love with travel, culture and finance around the world. After working in international real estate finance around Asia and America, I want to share some of my experiences.

Renting a $1.5mm Flat in Shanghai

Several roommates and I wanted to get a flat in Shanghai. We wanted to find a 5-bedroom flat with a massive living room in the center so that we could live together.

Tini, Benjy, Alex, Brian and Jos at the apartment in central Shanghai

Starting the Apartment Search

We decided on a location in People’s Square, because it was a central location next to a subway station, about USD $2,500 a month rental budget, and 5x single rooms so that nobody needed to have a roommate.

In China, there is no licensing for real estate agents. So, when I started looking online, there were many fake ads written by less than morally outstanding agents that just want to bring in potential house hunters. A fake ad can use a lower price or different photos. It took me about a month to narrow down the selection of properties in the city to a flat that fit my needs. I found out that there were no 6-bedroom apartments in the middle of the city, but I could find a 5-bedroom flat in the city center. The one-child policy meant that apartments with more bedrooms weren’t really in high demand.

An ad used to draw in customers in Shanghai

Visiting Properties 

When agents asked me about my budget, I soon found out that all of the apartments became that price.  Many times, the agent didn’t have anything that fit my requirements, so we visited other flats.

In China, properties are smaller than the online ads state. Perhaps a 200 square meter flat is actually only 140 square meters. In China, the property developers are allowed to state the “gross area” and the “usable area” of flats. The “gross area” adds a proportionate amount of common space from the development to the flat. Once you add a share of the garden space, lobby, elevator, fire escape, etc. then the flats are generally 30%+ larger in area. But, every apartment building is different.

This part of Nanjing Road in Peoples’ Square was only 50 meters from the flat

Qualifying to Rent the Property

In most countries, I would have needed a credit check. Maybe a proof of funds, bank statement, but all I needed was enough money to pay the first two months of rent, two months of rent in deposit and the agency fee for the real estate agent. My landlord was a Chinese man in his 50s from a neighboring city, Hangzhou. As many real estate investors, he didn’t want to manage the property, or pay for repairs, he just wanted his rent check on time.

3 of the 11 tallest buildings in the world are in this part of Shanghai

Flat Prices are High, But Rental Prices are not too bad

I was excited to rent a 5-bedroom flat with a massive living room in the middle of the city. But, if I wanted to buy the flat, the price would have been USD $1.5mm with a 500k down payment. But, the rental price was about USD $2,500 per month, and he only increased the rental price of the apartment by about 3-4% per year. In this case, the gross rental price was only 2% of the property value. This is a sign of a bubble in housing prices. Investors were only buying properties because they thought that the value would continue rising, not because the houses actually made any money from rental income. To put this in perspective, if someone wants to rent a $1.5mm house in Los Angeles, the rental cost would be around USD $7,000-$8,000 per month.


#1 – The condition and total size of flats were unknowns until I visited. Developers get to add area to the size and agents would change the photos of the real flat with better looking flats.

#2 – The lack of licensing of real estate agents means that once you find a real estate agent that you can trust, stay with him.

Shanghai was a bit of a jungle to find an apartment that was as unique as a 5-bedroom flat in the city center. But, the feeling of coming home everyday to a massive flat with friends and family was unbeatable.

Enjoying the apartment

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