Owning an old foreign-style villa in this city may just be a dream for most people, but these old structures are increasingly being seen as investment tools by individuals and institutions from both China and overseas.

Shaded by Shanghai's growing concrete jungle, these villas, with their unusual appearance, are attracting growing interest.

Old foreign-style villas in Shanghai refers to separate constructions built between 1840 and 1949, usually of European or American design, with fine decoration, dining rooms, kitchens and more than one toilet.

The city has about 6,000 such villas in total which can be found in old urban areas such as Xuhui, Luwan, Jing'an and Changning, occupying a total area of 1.47 million square meters.

"More and more investors are turning to these villas due to their limited availability in the market and their distinctive historic background," said Yin Kunhua, professor and director of the Real Estate Research Center of Shanghai University of Finance and Economics.

Most of the villas are in pleasant surroundings and enjoy many facilities, which also increases their popularity among the rich, Yin said.

"Due to their limited supply and usually prime location, the price of the villas is very high and is expected to continue to grow," said Yin, who is also a certified assessor.

Yin added that the unit price of old villas even exceeded 100,000 yuan (US$12,100) per square metre in 2004, which means a villa would cost between 20 million and 30 million yuan (US$1.21-3.63 million).

Around 95 percent of Shanghai's old villas still belong to various bodies due to historic reasons. But now, the government has decided to give those houses back to their original owners. The problem is that most of the houses have to be given to several heirs as most of their original owners have already died.

Most of the residents in these villas enjoy only the right to use them and cannot put them on the market. Many households share the ownership of the villas, which also makes it difficult for them to reach an agreement before selling it.

According to Stanford Old Villa Lease & Trade Centre, a real estate agency solely dedicated to trading in old foreign-style villas and other old residential buildings in the city, only around 60 villas could go on the market with clear property rights.

The latest report the agency issued showed that the villa leasing market was also prosperous in 2004 as the monthly rent was about US$1,200 for a floorspace of less than 100 square metres, US$2,000-US$4,500 for floorspace between 100-200 square metres, and US$5,000-US$10,000 for an entire villa.

"The popular villas on the lease market usually enjoy a quiet and pleasant environment and smaller villas are attractively decorated," said the report.

It also revealed that 60 percent of the buyers of old villas were investors, and among the total buyers, 30 percent were foreigners and 30 percent were people from Hong Kong, Macao and Taiwan.

No individual buyers could be contacted by China Daily because all experts, officials and real estate agencies refused to reveal the information in order to protect their privacy.

The example of the preservation of Moller Villa was praised by Tu Haiming, president and general manager of Shanghai Hodoor Real Estate Development Company and a member of the municipal People's Political Consultative Conference.

"The government will encourage the trade in old villas because a huge amount of money will be injected into the renovation of these buildings, which helps the preservation of these cultural relics," Tu said.

Moller Villa on Shanxi Nanlu, built in the 1930s, used to be in a very poor state of repair before being taken over by Shanghai Hengshan Group which spent 27 million yuan (US$3.26 million) repairing and refurbishing the building in 2001.

Now the villa is a popular hotel whose average occupancy rate is above 80 percent, despite its British-style luxury suite 4,000 yuan (US$484) per night.

Many villas have been transformed into restaurants or bars because customers enjoy their pleasant surroundings.

"Expense is the biggest concern in protecting historic buildings and it is impossible for the government to take full responsibility for this," Tu said.

Both Yin and Tu agreed that returning the old buildings to private landlords could ensure their preservation because only individual owners will really care about the buildings.

(China Daily February 3, 2005)