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China real estate a view from the trenches

 I told this story a few months ago, my ex-employer aka a fund manager for high net worth investors had a few mainland Chinese clients.   One family was finally able to "get out" 2023 -- when the COVID restriction fell away, and they had sold their business to a bunch of PLA generals and other officers.   The price was almost irrelevant, what the general gave them was far more valuable:  exit visas for the entire family.

The family owned 19 properties purchased between 2002 and 2018.   All the properties had been purchased around Shanghai, some of the country's most valuable and desired real estate.   It encompassed 90% of all their domestic savings.   

The family sold the entirety of their property portfolio.  On real estate they purchased between 2002 and 2015, they realized an average of 5% ROE.  On the real estate they purchased between 2016 and 2018, they lost 30%, 50% and 80%, of their capital.   

It is entirely possible that if they had sold prior to the pandemic they would have done better, but the truth was that this was a liquidation of their assets.  prices have already started to fall, and as more Chinese liquidate their real estate portfolio to meet their retirement needs the price pressure will only increase. 

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