Published on 14 March 2006 at 05:17 pm
Filed in Property News for China » Confidence Boost for China’s Investment Property Market
When the Chinese government announced a series of legislative changes last year that would directly and negatively affect the competitiveness of the Chinese investment property market in a bid to control the stability of the real estate sector, many feared foreign investors would shy away from China’s property market altogether.
However the recent announcement that financial giants Morgan Stanley are about to triple the amount of annual investment they make into the Chinese real estate sector has resulted in a massive confidence boost for China’s investment property market and set a precedent for institutional and private investors in Asia.
Morgan Stanley have announced that they will increase their levels of investment by three billion US dollars this year because they believe that the rate at which China’s economy is expanding will lead to an increase in demand for commercial property in particular, and an increase in property prices as well as an increase in yields achievable.
Following Morgan Stanley’s announcement a spokesperson from Jones Lang LaSalle added positive fuel to the property investment fire when they stated that China is a country with masses of potential for international institutional investors and that rising property prices are unlikely to deter any investor because the issue in China is one of title deeds and the legalities of property purchase and ownership. Large institutional investors can reduce their risk by committing the time, effort and finances necessary to ensure any deals they enter into are 100% legitimate and therefore they can start to profit from the property market more quickly.
There’s no denying the risks that exist in the Chinese real estate sector but there is also no denying the fact that there is more potential for profit and gains in China than in many other property markets in the world right now. While the economy booms, incomes rise and Chinese authorities commit to deregulation particularly in the financial and retail industries, the demand for industrial, retail, office and residential property in China continues to increase and Morgan Stanley can obviously recognize this fact which is why they have decided to commit further to China.
Morgan Stanley are not alone in their actions either; both ING and CapitaLand, one of Asia’s largest development companies have also shown their commitment to the Chinese real estate sector in 2006 and the actions of these institutional investors will likely pave the way for private investment opportunity whether directly or through property investment funds, the likes of which CapitaLand are planning on releasing by 2007.
