July 8.
HotsgHOLDERS must have noted with apprehension the references made within the past few weeks to heavy purchases of land in and about the Settlement. They are now reported to have amounted to some seven million taels, and a great part of this sum represents an increment in value. And this being the case the future of rents must give real cause for anxiety. These transactions have not been confined to any one part of the Settlement, but extend from the Bund to outlying Municipal roads. If in the central district alone they would not have alarmed the householder, although the prices now given for property in that quarter are to-day colossal. The most recent transaction on the Bund for instance, is reported to have been, at Tls. 300,000 per mow, and converting this into sterling at a present average rate of exchange, we find the price of this land coming to about £300,000 per acre. Nothing of the kind has ever been heard of locally before, and very few lots of property in the -world can compare with its cost. Even in London, we are informed,.such a price would be realized only in exceptional cases, and one would have to go to New York for it to be a commonplace. There are, of course, exceptional factors controlling the price of this land, which do not apply elsewhere in the Settlement. When, however, property in the residential districts, starts to increase in value beyond what seems a reasonable figure, it is high time to take stock of our position.
This phenomenon of a property boom has been, often seen in Shanghai, and it has two principal contributory causes—bad trade and unrest in the interior. To-day both are in full operation, and the Chinese capitalist then shows his supreme faith in Shanghai and its foreign regime by turning to it as the safest medium for the investment of his funds. Land offers the kind of security he wants, he pays excessive prices for it, and the boom is set going. Previous experience has shown that with the return of industrial prosperity and more secure conditions throughout the country, the boom comes to an end and prices tend to recede. But only to a certain point; they stabilize themselves at a level of values always higher than before the boom, and proceed to a continued rise. Local history thas never shown a land boom being followed by any steady recession in values. Now land in the residential districts of Shanghai is not worth the price at which it is changing hands to-day. At present rents property gives a fair economic return, but no more in the majority of cases, whereas at the new prices current the return will be less than fair, Are we then to suffer under the burden of higher rents, simply because capitalists, failing to find a good investment for their money elsewhere, come with it to Shanghai, and force up property costs? They have no interest in the Settlement other than as a place for investment, and if they are allowed enough rope they will play havoc with the economy of the Settlement.
When Hongkong was considering its housing question two years_ago, the conclusion was reached that the average man spent one-fifth of his salary on rent. The view is taken, in Shanghai that he has to spend one-quarter, which is altogether too much from the economic standpoint. If the present land boom goes unchecked he is likely to have to pay more, and there will come a time when. it will be impossible to keep a home together on current salaries. It is a contingency liable to arise, at any moment, for-events have shown that property here is hopelessly subject to fluctuation. Some firms have realized the position and done something to alleviate the lot of their employees by the construction of houses, only it has. not been carried far enough to show a tangible benefit to the community at large. If the case to which we have referred comes to pass, what then will be the position of firms who have taken no steps in the matter? A duty will be imposed upon them to pay salaries adequate for the housing of their employees, and events might so occur that such a-measure would prove too expensive, too costly in view of the amount of business they were doing: A suggestion which has been put forward accordingly deserves consideration, that firms should take houses on a twenty-five tyeers' lease for their employees, and by doing so assist in stabilizing the salaries they would have to pay. It has been worked out by one well versed in the housing problem, and so far as can be seen would be of benefit both to employers and employed, as discounting inevitable periods of boom and speculation in the future.
Text read from the printed page and cleaned; old type leaves the occasional error.