In a twist worthy of a luxury soap opera, China’s wealthiest citizens are falling head over heels for lavish homes. Many of whom may never see a neighbor.
As revealed in a recent report, China’s rich are spending their fortunes on mansions that look like a Hollywood set, complete with marble columns, faux-European facades, and more chandeliers than Buckingham Palace.
The only thing these dream homes are lacking? People.
Dubbed as “villa fever”, this trend has seen whole neighborhoods of luxurious houses constructed—sometimes on remote city edges or in newly planned towns—standing empty. The buyers, seemingly in no rush to move in, prefer to tuck these homes away as status symbols or handy investment opportunities. Some simply want the Instagram bragging rights; after all, what’s a billion-yuan bank balance if there’s nowhere to park your gilded Tesla?
Leading the pack is 36-year-old Alex Shang, fresh from selling his tech startup, who now finds pleasure not only in Silicon Valley-esque profits but also in panoramic views from the balcony of his 30-bedroom palace.
House prices in Australia have risen over the long term. such that Sydney’s midpoint value has reached to $1.5 million. Also, investors are considering properties with a backyard as a good way of investing.
Increasing population = Increased property value
In his words, he needed space for his family, pets, and one or two indoor golf simulators.
About Alex
According to Alex, an apartment valued at $700,000 to $800,000 is a viable option in Sydney, and the price will not increase much in the near future. However, such a deal is suitable if you are looking for a house and not an investment. For that, a standalone house in Brisbane, Perth or Adelaide with good capital growth and a good rental yield is a viable option.
In 2005, after completing his Bachelor’s in Economics (major in share trading), Alex moved from Sydney to China when he was 24 years old. There, he worked as a receptionist for a real estate company until he got his masters in accounting and business administration.
Now 44 and a property investor, Alex admits that his first Sydney apartment purchases were a failure, which led him to now solely focus on buying houses. He figured it out early that if he had started investing in purchasing houses, it would have been a profitable investment.
Next what? He sold all his apartments and started buying houses, and THAT is from where his money continues to come.
In 2011, he started by purchasing a 2-bedroom unit in Kogarah for $400,000.
Alex’s Madarin-language book for Chinese property buyers ‘Australian Property Strategy’ talks about how to build a property portfolio in Australia.
According to him, the best time when one should start investing is in his/her 20s. Then, in the first 10 years, they can buy properties with high capital growth.
In next 10 years, they should invest in properties with high rental yield.
Then by the time they reach retirement, selling a few properties and paying off debt and then living off the rest is a possible option.
His Rule: Look at markets with diversified economy and population growth.
If taking inspiration from Alex Shang, then modesty and privacy is the key. He does not talk about his family or properties he owns and does not prefer living a lavish lifestyle or commuting in luxury cars. He is often seen travelling on a motorbike.
Investment Tips by Alex Shang
- Do not buy a property just because it is cheap. If it holds no future in the market, avoid it.
- Number of properties doesn’t matter, their worth does.
- Hold properties with positive cashflow. If the yield is more than morgage interest rate, use the cash to invest in ETF.
- Individually you can loan 5 times your salary before tax from bank. If you want more, try borrowing as a couple, as both can borrow 6 times their pay.
- Rent your mortgage property, because with rent money it is easy to pay of home loan.
- With money flow from rental properties, you can have a better chance of early retirement.
- As an investor you can also claim rental losses on tax.
- On retirement, you can choose to buy a few debt free houses and enjoy capital growth and cashflow.
Alex Shang argued that if a person has an investment portfolio of $5 million, he can invest the rental income in an exchange trade fund (ETF) on the Australian share market, and earn 7% returns per annum.
Critics:
While the average Chinese citizen might struggle to afford a shoebox apartment in central Beijing, the country’s boom in luxury property continues amid government crackdowns on “conspicuous consumption”.
Developers, undeterred, push the definition of luxury further: think private lakes, underground garages, and more bathrooms than the cast of a period drama could possibly occupy.
Not everyone is charmed by the trend. Critics point out that these “ghost mansions” highlight the growing wealth gap and wasteful use of resources. Online, however, the reaction is mixed: some declare the mega-properties “architectural masterpieces”, while others wonder if they’ll ever see more action than a lonely tumbleweed.
For now, China’s rich remain undeterred. If the property market cools, they can always turn their empty villas into the world’s quietest party venues—BYO guests required.
In summary: The new dream home for China’s super-rich comes with all the trimmings, minus the hassle of neighbors. Who says you can’t buy peace and quiet?
