Shanghai does have fantasies of being New York City...or even Hong Kong...in all sorts of ways including real estate. But let's do the math, that 50,000 RMB/sqm = USD $680+ per square foot, using current exchange rates. Does anyone seriously believe that anything in Shanghai or anywhere in the PRC is truly worth that much? There will always be a few uber-luxury projects in China that for a variety of reasons (not all of them market-based, transparent, and on the up-and-up) will do well. But the vast majority of the urban population--let's not even get into the 2/3 of China population that are rural farmers--can't even afford 10,000 or 15,000 RMB/sqm. And that's not going to change anytime soon.

In the last few years, most of the foreign property buyers have been from HK, Taiwan, and Singapore overseas Chinese, but that market may be pretty well sated for awhile. Seems like most of those folks who wanted to by an apartment or twenty for investment have already done so. Non-overseas Chinese foreigners were never more than a very small fraction of the total buyers--and most of those have long-term business interests here and/or Chinese spouses. That's not likely to change either. So common sense asks where is the "infinite" upward price momentum over the broad market (which is not represented by Star River) going to come from?

There is actually a big shortage of broadly affordable urban apartments in the central areas of first tier Chinese cities (under RMB 8000/sq meter or US$ 100/sq ft). This is primarily because for a number of years, local governments set the basic land rights acquisition price so high (higher kickbacks into their own pockets) that developers who bought the rights can't make the financials work unless they build high-priced apartments. Not to mention there's no cachet or chic image in building for the broad market. Remember in China all land is owned by "the People" and controlled by the State, which inevitably leads to interesting distortions in land pricing/valuation that aren't easily corrected or rebalanced in the short term.

I seem to be having a flashback to the late 1980's/early 1990's when the Japanese were touting the collective "value" of all Tokyo property exceeded the collective value of all the real estate in the United States combined. We all know how that story came out.