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Friday morning, I received a text message from the developer I met on Wednesday in Nanjing. They asked how long it would take to find an investor for their project, and to find a hotel developer. I gave them some time estimates and promised a written response next week.

Building a School

I'm on the board of an NGO (Non Governmental Organization) that is planning on building a school in Laixi, China, well to the north of Shanghai, near the coast.

Currently, the land is farmed by poor farmers. The government, in negotiating with my NGO, is willing to sell the land (or, more accurately, ground-lease for seventy years) to us for less than the current market-value, because they'd like to encourage a school to come in and add educational facilities. My NGO plan a school and a residential component, as housing for teachers and students, and villas for visitors and retirees in a pleasant environment. The money paid for the land goes to relocate the farmers.

I went to Laixi, and met with three city officials. I was treated extremely well. As I got off the train upon arrival, dressed in jeans, I was met by three city officials, all dressed in suits, a driver, and a van. They showed me around for the rest of the day and evening and half of Sunday. We discussed the NGO's plans, saw the city, and walked the land. I never ate so much in my life.

The NGO's progress has been stalled at the same phase for three years, and my visit seemed to ignite some new enthusiasm in the project. I'll keep you posted.

The Most Expensive Land in China

I read about a large land transaction in Shanghai, hitting a high water mark in price per square foot (or square meter, if you prefer).

The site is in Xiangwan, in the north section of Shanghai. I'd been there, but it wasn't remarkable, so I decided to visit it again.

According to the China Economic Review, "the land cost equaled RMB12,500 per square meter. That is each apartment costs RMB12,500 per square meter before the block is cleared." At my most recent trip to the bank to change money, that would equal $1,671 PER SQUARE FOOT for the land cost component of the final apartment construction cost! That's not a typo.

So this is what I came here for. What's going on? Are there enough consumers in China to buy apartments that will cost five thousand dollars a square foot and up? Are developers using good sense? What kind of market studies do they do? I must admit, I'm impressed by the level of consumer life in Shanghai. I didn't know that Chinese people live so well. There are dozens of huge A-class shopping malls around, filled with businesses, few or no vacancies, and obviously surviving selling brand-name goods at full price. There's a big story here, economics-speaking, about creating a middle class that compares favorably to American demographics.

A Master Planned Community in Nanjing

I was pleased and honored to be hosted by a developer in Nanjing, China, to see a master-planned community they're building.

I caught the 6 AM train to Nanjing from Shanghai. At speeds of up to 160 MPH, I was in Nanjing by 8 AM, and met by Ben, my translator-friend, a driver, and a 735 BMW. We picked up Mr. Li, the developer representative, and we proceeded to the property.

The country side was beautiful. It was reminiscent of the wine country of Northern California, with vineyards and rolling hills. I arrived at the property to find some old buildings, a few new homes under construction, and a small lake.

Mr. Li walked me around. He showed me the new monument entrance to be built, connecting the development to the new road, being completed now, from the major highway seven minutes away. He showed me the plans to fill the lake to a larger size, add boating, and the locations of three boutique hotels at different positions in the development. The homes under construction were pre-sold, at about four hundred thousand U.S., which works out to about one hundred U.S. a square foot.

I asked about the larger decision-process. How did they decide on this plan? How are they sure there will be buyers when they're done?

Mr. Li told me that the property is located next to a national park which is being further developed by the national government. The only private property adjacent to the one they are developing is owned by a private company that uses it for company training meetings. There were no competing developments in the area. There was no more land available to develop for this type of housing. Further, the location puts it less than an hour from Nanjing (fourth largest economic center in China), and two hours from Shanghai and Hangzhou, two economic centers with huge demographics of affluent Chinese looking for a second home in a resort-centered community far from the city environment but close enough to drive to easily.

He went on to say that the eventual development would have many amenities. The water would offer boating and swimming. The hotels would serve as restaurants and facilities for the residents to dine and be entertained. He drove me by a terrific golf course about fifteen minutes away.

I asked if he needs anything. Yes, he'd like help in three areas. First, a hotel developer could build-to-suit three boutique hotels and operate them. Second, most of their money is in place but they could consider an investor. Finally, he'd like to attract foreign buyers to a world-class resort in a charming area of Nanjing (only twenty five kilometers from the Nanjing International Airport).

The Most Expensive Apartments in China

I heard about Tomson Riviera, a condominium complex in Shanghai, and decided to check it out.

Tomson Riviera is interesting because it's in deep financial trouble. I read that it was completed and ready for buyers in April 2006, and didn't have a single sale for nine months, when it sold four units (out of hundreds) to overseas Chinese buyers, which implies to me that insiders were buying units to stimulate interest.

I found this about Tomson Riviera: "Spanning over an area of 20,000 sq m, the four-block Tomson Riviera condominium consists of two 40-storey and two 44-storey towers. Each unit is between 434 sq m and 1,200 sq m, priced at RMB 80,000 to RMB 150,000 per sq m – reputed to be the most expensive in Shanghai." To my American friends, they start at $10,666 PER SQUARE FOOT and go up to $20,000 PSF.

I went to Pudong, the eastern section of Shanghai, known for explosive recent real estate development and large company offices. Tomson Riviera is located on the waterfront of the Pu River, looking across at the Puxi section. I walked the neighborhood, and found the waterfront to be very well developed, with nice restaurants, good walking paths through park-like surroundings. It was very nice.

I walked up to Tomson Riviera. I was met by a guard, who ran inside after motioning me to definitely stay where I was, and a few minutes later returned with a young woman who proceeded to interview me for a potential appointment to see a model. It was 115 degrees standing in the parking lot, and I probably didn't make the best impression. (I should have arrived in a limo). I filled out a form, and the young lady told me that someone would call me if they decided to show me a model. That was the end of the interview.

Okay, I'm even more intrigued, now. As a developer/partner in the U.S., I know someone's put a lot of money into this project, and wants to be paid back. What's going on? Stayed tuned.