Published on 10 April 2006 at 04:57 pm
Filed in Property News for China » China Investment Real Estate Report
There appear to be three fundamental factors driving the China investment real estate sector currently according to international property investors who report that any commitment they make to China is for the long term.
The three factors driving investment are the fact that real estate assets in China remain low cost in relative terms, the Chinese currency is appreciating and the local government is committing substantial investment to infrastructure projects across China.
These factors are driving institutional and private investment across China with the strongest gains being derived from real estate assets in second tier cities at the moment.
As stated purchasers consider investment made into the real estate sector in China to be a long term commitment following on from the government’s recent blanket changes to property ownership rules, the rules were introduced to restrict the real estate market sector to create a more sustainable property market in China.
Many believe the government’s interception was well timed and has prevented the real estate sector from overheating in China; although their actions did result in property prices actually falling in some cities such as Shanghai where they dropped by up to 15% following on from a couple of years where growth soared by up to 30 or 40%.
Price corrections in some of China’s major cities now mean that real estate assets across China are on the whole well priced and considered by many international real estate investors to be cheap in relative terms.
More areas of the country are coming under the spotlight for property investors as well because the government in China is committing to a series of massive infrastructure projects to develop transport links and make more areas of China more accessible. One such area that is becoming more accessible and therefore of intense interest for real estate investors is the popular tourist resort of Hangzhou which will soon benefit from a fast train route to link it to Shanghai in under half an hour.
Other cities enjoying strong price gains and real estate investor interest are the second tier cities of Dalian, Hohhot, Shenzhen and the Special Administrative Region of Macau (pictured), with Macau’s appeal about to be boosted by up to twenty four billion dollars worth of private and government investment. Investors know the climate is right for them to commit to China, especially now the Chinese Yuan is appreciating, and real estate investors are no exception to this.
International property investors see buying China investment real estate as a way for them to tap into the appreciation of the Chinese Yuan which has been rising in value since last July, this appreciation of the currency naturally makes Yuan dominated assets such as property in China worth more.
All in all China’s property sector is looking healthy for 2006 and real estate investor interest levels in China are rising all the time.
