Silo City
Trip Start
Apr 26, 2006
1
4
13
Trip End
May 10, 2006
Beijing,
China
Friday, April 28, 2006
The main purpose of this trip was to buy the Silo City property and also to understand the real estate market in Beijing. The group left for the Silo City property at 9am in the morning to see the models and check out the neighborhood. The first I noticed on the drive to the area was that the Silo City property is run down and very poor. The other thing is that the Beijing traffic is horrible. Since we were driving during rush hour, it took us appromixately 25 minutes to get to the location (which is about 3 km from the hotel).
When we reached the location, we were immediately taken to the sales office and met the sales manager, Renee who showed us the property. The difference between sales mock-ups in China and the US is that in China you can put any store in the display when the company never intended to the rent the retail property. For example, in the mock-ups you see hagaan-das, Omega, and other major retail stores but when I asked Renee about the stores, she said that there was no standing contract from these companies to open shop here. Rather there would be something "similiar". The development was designed by an American firm and mainly targetted to the local Beijing populations. The only building that was opened to non locals was the B9 building that we were buying. Renee's whole thing was that they have been very successful in selling to the locals and that they didn't really need to sell to the Westerners other than the fact that the company wanted to publize its name to the world by offering a single building to outsiders.
We next went to the actual site and looked at the mock-up properties.
Silo_City_Current1
The design and furniture were nice looking but it is hard to tell what the final look will be because in general mock-ups and what you ultimately can be very different.At the end of the tour we went to the conference room to discuss paperwork and finances for the purchase. Robin (the annoying Taiwanese woman) and guy from LA started to have their doubts. Robin in particular kept complaining about how the area wasn't like the US, how she was investing her good money and wanted a return. Basically she made much ado about nothing. She was an idiot who could not make a decision on her own (not that she would admit it). Anyways, she complained and wavered for over an hour (wasting everybody's time). I think Renee got annoyed and mentioned to our guide Jeff that the price we were getting was great and that they could sell it to the locals for the same price. I tended to agree with Renee. Robin was being a bitch because she wanted to be treat and pampered. It was like she wanted to be treated like royalty and buy a condo in Manhattan but only wanted to pay Brooklyn prices
Paperwork, Paperwork, (AND MORE PAPERWORK)
The problem with China is that technically it is still communist but practically it is capitalistic. The problem is that this is contradictory and the offical political stance is based on some technical loopholes. For example, when you buy commerical real estate, you are not "buying" the land but rather doing a 50-year lease. Similarly, residences have 70-year leases.
Silo_City_Current2
Consequently the paperwork is tedious and difficult. The tricky part is that in each city/province, the specific rules are a bit different. That is the paperwork and process in Shanghai is different from Beijing and is different from somewhere else.In Beijing "leases" must be in Chinese so if you don't have a Chinese name, you'd have to create a Chinese name in order to receive an official certificate of ownership. The builder only has to put a roof on the building before it becomes the buyers duty to secure and pay for their share of the building. In essense there is a large risk to the buyers' capital. For example in the US, the building must fund the whole building project whereas in China the building just has to build the foundation, floors and a roof.
Once you pay for the place, the builder completes the rest of the building, that is he finishes the interiors and finishes the exterior moldings. This process generally takes about 6 months and they hand the keys over on an agreed date. In most cases, the handed over condo, office space is empty. That is there is nothing other than piping. You have to hire contractors and pay for the flooring, walls and other stuff yourself! In our case because our project is targetted to overseas Chinese, the project will finish the individual interiors along providing simple furnishings.
The paperwork phase took us almost 8 hours to complete. Most of the people are co-signing ownership with a spouse or relative who is not present. Because this is rare in China, the process was a pain in the ass. Power of attorney must be notarized by China-based lawyer or the Chinese embassy in the USA. However because our real estate company didn't make this clear, everybody paperwork issues. My power-of-attorney paperwork for my sister could not be used in China. Fortunately for me, my sister was coming to Beijing in a few days so we could co-sign in person. Since my case was simple, I had nothing to do and just sat around most of the time. Robin spent most of the time complaining about the paperwork how it wasn't like the US and how inconvenient it was for her. I was getting really irritated at this point. I wanted to say, look woman "We're in friggin China. OF COURSE ITS DIFFERENT!!!!!".
