See also gross^nett rental yield #careful with U.S.

— Tier 1 China residential valuation is overpriced according to my 3_ratios

• Ratio_II: average salary
• Ratio_BB: For a typical household, annual CPI-basket aggregate cost should be  10~15% of their home valuation. Much lower in China top cities
• Ratio_RR: rental yield

— Ratio_II .. According to a China government survey, in megacities like Beijing, Shanghai and Shenzhen, the housing-price-to-annual-income ratio was above 35 – meaning that the price of an average house is equivalent to roughly 35 years of the average Household income. Household size can be 1 or more.

— Ratio_RR

• As of 2022, TPY central shophouse $12k/M rental for a $3.8M (asking) price, about 4%. Very good but probably short lease remaining.
• As of Jan 2020, for a CNY 4,000,000+ Shanghai school district home, rent = CNY 5K, NGRY == 1.5%
• As of Sep 2016, for a typical CNY 6,000,000 Shanghai home, rent = CNY 7k to 8k/month. NGRY ~= 1.5%.
• As of Jan 2017, for a CNY 3,000,000+ Shanghai home, rent=CNY4k, NGRY ~= 1.5%.
• As of 2017, For a incomparable (!) Singapore public housing S$600k home, rent = S$2.5k/month. NGRY = 5%. Note private properties would show much lower NGRY.
• Zhejiang village shop unit 店铺 — 2,500k investment. Annual gross rent 100k i.e. 4%, much higher than residential
• BGC — Chun Tih said condo can generate at least 5% net rental yield. https://bgcmegaworld.com/for-foreign-investors/ says 8-11% GRY
• Thailand — 泰国中心地区的公寓平均年租金回报率在房价的5-8％左右，有的地方可达15%。在旅游胜地芭堤雅，人民币60多万的二线海景公寓能租到4000元人民币/月；人民币100万的房子(better location?)能租到10,000元人民币/月 — 12% NGRY but I think these are the outliers. The typical GRY is much lower.

Conclusion: buy SG and rent out; live on rented in China

This is a sign that Shanghai/Beijing properties are overpriced relative to local living standard (CPI) and wage level. Housing overheat affects rental rate more gradually. In fact, investment and leasing markets can become somewhat decoupled in overheated locations. Owners of expensive houses are often complacent receiving a much lower rental yield than many years ago. See my blog on defying gravity.

• buying demand is driven by deep-pocketed investors, and hot money from overseas
• leasing demand is driven by ordinary local wage earners, so if rent rises as fast as valuations, then they will be vacant as ordinary rents can’t afford.

Q: in Manila and Phnom Penh where gross rental yield is around 7-10%, do we have reason to say property price is less overheated?
A: That is only one reason fewer to suspect overheat. Other signs may still point to overheating.