China
Read our property and real estate news and updates on the property market in China including major cities like Shanghai and also Hong Kong. Information on where the Chinese real estate market is heading in comparison with the rest of the world. Reports and statistical information on property for sale in China whether it is residential or commercial property.

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China’s new laws, which make it almost impossible for foreigners to buy investment properties, are opening the way for wealthy Chinese to increase their dominance of the country’s booming luxury market.

Recently the “baofa hu,” or “get-rich-with-a-bang folk,” became the marketing targets for plush housing estates like Chateau Regalia in Beijing, where “celebrities are distinguished by their privileged status,” the development’s Web site says.

“In cities like Beijing, foreigners are no longer at the top of the food chain,” said Luigi Tomba, a former Italian diplomat in Beijing who is researching China’s urban communities at the Australian National University. “The old upmarket ideal of replicating the West is now changing. Developers are applying feng shui considerations, catering not for rich foreigners but rich Chinese.”

That recent shift, fueled in part by surging local incomes and the all but flat market for foreign purchases, has analysts saying that the severe restrictions actually will have less of an effect on the market than initial media reports predicted.

While the modern concept of owning a home is barely a decade old in China, the ownership rates in many Chinese cities already match those in Western countries.

A Harvard University study showed that the owner-occupancy rate is as high as 80 percent outside Beijing’s second ring road, which traces the old inner city walls, thanks to a concerted government campaign of subsidies and incentives. In comparison, home ownership rates in Australia, Britain and the United States are all at or slightly less than 70 percent.

The new rules, announced July 24 by six core economic departments and agencies, close an investment window that had been open to foreigners for barely more than three years.

And Simon Black, a partner in the Shanghai office of the Allen & Overy law firm, believes the Chinese government means what it says. “Property ownership by foreign companies and individuals for investment is effectively prohibited,” he said.

There are some exceptions. Chinese living overseas and citizens of Hong Kong and Macao will be allowed to own second homes on the mainland. And a foreigner who has studied or worked in China for at least a year will be allowed to buy a home, but not to become a landlord.

“It will be tough for individuals to get round the restrictions, if fully enforced,” said Sam Crispin, founder of Crispin Property Investment Management in Shanghai.

And the move is expected to dampen prices at some luxury complexes, especially in expatriate enclaves in Beijing and Shanghai.

Zhang Xiping, project manager at Beijingrealestate.com, is concerned about capital growth in foreign neighborhoods around Chaoyang Park and Lufthansa Center, in the eastern part of the city. But, she added, the market’s lower and middle ranks will be largely unaffected.

Michael Hart, head of research at Jones Lang LaSalle real estate in Shanghai, echoed her comments. “Some projects that have significant foreign buyers will see some impact, but it will be very confined,” he said, noting that the rules really were designed to “soothe the fears of the local public,” rather than tackle the issues of housing affordability or economic overheating.

“It’s perception,” Hart said. “People get confused by the talk of buying by Morgan Stanley and Goldman Sachs. There’s been maybe a dozen deals that have been talked about a hundred times each.”

China does not have reliable records of foreign property investment, a deficiency that the government hopes to rectify with new monitoring rules.

Figures from the State Council showed that property investment by foreign companies grew 28 percent in the first half of this year compared with 2005. But that was from a small base and only slightly faster than the 24 percent growth for overall investment in the Chinese property market, listed at 769 billion yuan, or $96 billion, for the first half of 2006.

In contrast with the absolute ban on new foreign landlords, the new rules do not block foreign companies from building residential or commercial properties – as long as they meet equity, residence and licensing rules. “For institutions, I believe it will not be that difficult if they already know their way around the bureaucracy,” Crispin, the property manager, said.

Source: IHT

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Restrictions on overseas property investments issued on Monday sent a warning signal to individual investors from Hong Kong, Macau and Taiwan even though detailed rules were not unveiled, analysts said.

Under the new rules issued on Monday, foreigners won’t be allowed to buy homes or apartments in China’s mainland until they’ve been here at least one year. But Chinese residents of HK, Macau and Taiwan and overseas nationals can still buy houses at any time for personal use up to a “certain” size, which the central government hasn’t specified.

“The impact on buyers appears limited as Hong Kong, Taiwan and Macau residents, who account for the lion’s share of overseas demand, face limited curbs compared to expatriates,” said Morgan Stanley in a research note published yesterday.

Individual investors from Hong Kong alone have spent 4.7 billion yuan (US$587.5 million) buying property on the mainland in the first half, a 10 percent rise over the same period of last year, according to Centaline China’s latest report.

At least one third of luxury apartment buyers in Shanghai are residents of Hong Kong, Taiwan or overseas Chinese, industry insiders estimated.

Beijing introduced a new rule last week, setting caps on the number of properties that Hong Kong, Macau and Taiwan residents can buy. A resident of Hong Kong, Macau or Taiwan can buy one apartment in Beijing, the Beijing News reported yesterday.

Though detailed restrictions in Shanghai have not been unveiled, continued speculation about new measures has had an unsettling affect on the market.

New launches of luxury apartments such as Jing’an Four Seasons on Weihai Road and Lakeville Regency near Xintiandi reported strong sales recently as buyers accelerated purchases prior to possible restrictions.

“Individual investors are inclined to follow suit after foreign institutional investors jumped into the residential sector in the first half,” said Ye Ying, an analyst with Shanghai-based E-house R&D Institute. “They are betting these big firms have better calculations on investment return.”

Source: ShanghaiDaily.com
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BEIJING (XFN-ASIA) – The nine regional land supervision offices to be set up by China’s Ministry of Land and Resources (MOL) will serve to monitor land deals more closely at the local level in order to discourage illegal land allocation and rein in investment, Deutsche Bank said.

In a statement, Deutsche Bank said the plan reflects Beijing’s determination to slow investment growth amid the current round of policy tightening.

‘This step reflects the growing recognition by top policy makers that the most important reason for the central government’s failure to control investment growth over the past few years was that most local governments ignored the land supply quotas set by the central authorities,’ it said.

‘If the central government is now able to cut illegal land deals by half via strengthened supervision and the ongoing anti-corruption campaign – which we believe it will – FAI (fixed asset investment) growth should easily slow to 20 pct by the end of this year,’ it said.

Stricter land supply rules would be much more effective than further government-initiated rate hikes, it added.

Since September 2004, the MOL said the number of illegal land deals in 15 major cities increased to between 60 pct and over 90 pct, compared to 64 pct in the preceding 11 months.

The MOL announced in April that China’s land supply quota in 2006 would be the same as the year before, which could lead to single-digit FAI growth, but Deutsche Bank said this also means that China’s actual year-to-date FAI growth of 31 pct could be attributed to largely to projects involving illegal land sales.

Deutsche Bank also said a proposed reform of budgetary processes that will include all land sales into the budget system would likewise curb investment.

Currently, proceeds from land sales are spent off-budget and are unsupervised by the central government and local legislature, which has led to local governments attempting to maximize land revenue.

‘If this proposed budgetary reform goes through, it will be the most significant contribution from the public finance system to the macro stabilization program, in our view,’ Deutsche Bank said.

Although it does not see mid- and low-end property land supply being affected, Deutsche Bank expects that projects involving high-end property, manufacturing, government offices and infrastructure in coastal provinces will slow as a consequence.

‘We expect the negative demand impact from these measures on construction materials and construction machinery to become visible within three to four months,’ the bank added.

Source: Forbes
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BEIJING China on Monday announced rules to limit foreign investment in property amid quickening efforts to cool the surging economy, the official Xinhua press agency said. Under the new rules, foreigners would face “restrictions on residential property purchases,” the agency said, adding that developers would be required to invest more of their own money in projects to reduce heavy borrowing.

The rules are meant to “improve the efficiency of using foreign investment,” Xinhua said. It did not say when the regulations would take effect. The regulations are similar to a draft published this month, but they add a requirement that foreigners must have worked or studied in China for at least a year to be eligible to buy a home. Other aspects of the new rules, drawn up by the Ministry of Construction and five other government departments and published on Xinhua’s Web site, were unchanged from the draft.

Michael Hart, an associate director of the property consultants Jones Lang LaSalle, based in Shanghai, did not see the regulations as a serious obstacle to foreign investment in the sector. “I think the government sees a positive influence from foreign investment, because if they didn’t, they would’ve banned it outright,” Hart said.
“What they are doing is funneling investment in through structures where the central government can have more clarity on who in fact is investing and how they are investing,” he said.

The rules stipulate that only foreign entities with offices in China and foreign individuals who meet the residency requirement may purchase property, and that it must be for their own use.Foreign companies or individuals who want to buy property not for their own use must establish a locally registered investment company and buy through that company. Foreign property firms investing more than $10 million must have registered capital of at least 50 percent of the investment.

The government has tried to rein in an investment boom by raising interest rates, tightening lending rules and banning some construction projects outright.
Officials worry that excessive spending on assets could ignite inflation or cause problems for banks if deeply indebted borrowers default on loans.
China has had limited success in its attempts to control frenzied building of factories, luxury apartment and other projects that have turned its cities into forests of construction cranes.

The government said last week that the number of new construction projects jumped by 22.2 percent in the first half of the year, fueling an 11.3 percent rise in economic growth in the second quarter, the highest rate in a decade.Investment from Hong Kong and other sources outside mainland China has poured into real estate.
Foreign investment in Chinese real estate rose 27.9 percent in the first six months of the year from a year earlier, Xinhua said, without giving the total amount invested.
Investors apparently hope to profit from rising prices and an anticipated rise in the yuan, which would lift the value of mainland assets in foreign currency terms.

Source: IHT

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Shanghai Skyscape Originally uploaded by pmorgan.

SHANGHAI residences will be in oversupply in the next few years as residents will only need up to 24 million square meters a year, while 33 million square meters of new residences may enter the market annually, China News Service quoted a survey as saying today.

In some neighborhoods, the amount of unsold residences accounts for 40 percent now.

Property sales tumbled last month by 35.6 percent to 16,245 units from a month earlier. This was the lowest in the first half of this year except in February, as many potential buyers and developers took a wait-and-see type of attitude because of the uncertainty of when and how the local government will implement new state regulations.

The transacted volume in Pudong New Area reached 2,298 units last month, nearly 1,000 less than a month earlier, although the volume was the highest among all districts in the period.

Sales in Minhang District dropped the sharpest in the period, and its sales last week fell by 48 percent from a week earlier. But sales in suburban areas, like Nanhui District, grew because of the lower prices.

Last week, residences price dropped 5.9 percent from a week earlier to 8,370 yuan (US$1,046) per square meter.

Last month, 38.9-percent less residences were promoted in the market, totaling 989,000 square meters, after the central government began implementing regulations to cool the real estate market.

“Developers are uncertain about the future market, so they are planning to sit back and wait for the changes. The real estate market will enter its off-season in the next few months,” said an anonymous developer.

Source: ShanghaiDaily

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Dubai: Emaar Properties has opened a full-fledged office in Shanghai, marking its entry into China with a plan to roll out a number of real estate projects including residential, commercial, hotels and hospitals, a company statement said.

The move comes following the Dubai-based real estate developer’s major foray in key growth markets including Saudi Arabia, India, Morocco, Egypt, Syria, Turkey and Pakistan with projects value combinedly exceeding Dh230 billion, including Dh100 billion in Saudi Arabia, Dh78 billion in Pakistan, Dh25 billion in Morocco, Dh10 billion in Turkey and a further Dh20 billion in India.

Earlier, it acquired US-based John Laing Homes for Dh3.856 billion ($1.050 billion), a strategic move that has firmly perched Emaar in the international spotlight.

Emaar is the third UAE entity to have made major foray into China, the world’s second largest economy following DP World and Damac Propertieswho have already pledged sizeable investment in the People’s Republic.

“Emaar’s multi-pronged approach to tap into the Chinese economy, which gained a 9.9 per cent growth in 2005, will flag off with the development of modern, community-centric lifestyle developments in Beijing and Shanghai. These residential projects will feature the entire spectrum of amenities including fitness centres, retail malls, schools as well as hotels,” the company said in a statement.

Mohammad Ali Al Abbar, Emaar chairman, said the premises in the Jiushi office building in Shanghai will open this month. The office will steer Emaar’s ambitious investment plans for the world’s second largest economy.

“Emaar’s entry into China completes a strategic leg of our international expansion programme that focused on three booming markets the Middle East, the India Subcontinent and now China,” Al Abbar said.

“Following its entry into the WTO in 2001 and market reforms gaining pace, the Chinese economy has been growing at an impressive rate. Its contribution to the global GDP growth is more than that of America as well as that of the three next-largest emerging economies India, Brazil and Russia. Underpinning this growth momentum is the property sector.”

Beijing and Shanghai are two focal points for Emaar’s entry into this mega market. In particular, Beijing will be the venue for the 2008 Olympics and Shanghai will host the 2010 World Expo.

Source:
Gulfnews
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BEIJING China plans to restrict purchases of real estate by foreign investors in order to reduce speculation and prevent a property bubble, a government official said Thursday.

New rules defining what type of overseas investors can buy property could be announced this month, Lin Zheying, deputy director general of the Commerce Ministry’s Foreign Investment Administration, told reporters in Beijing.

The regulations may threaten plans by investors like Citigroup and Morgan Stanley to increase holdings of Chinese real estate after prices rose 7.1 percent in Beijing through May. Prime Minister Wen Jiabao has curbed lending to cool an economy that grew 10.3 percent in the first quarter and to prevent a drop in land prices from causing loan defaults.

“The government is worried that overseas investment is bringing too much foreign currency into China and that it will cause property bubbles,” said Liu Yang, a fund manager at Atlantis Investment Management in Hong Kong. “But people are buying because they see real growth prospects and real returns from Chinese real estate.”

Policies to cool foreign property investment come amid a raft of other measures Wen is implementing to cool a credit-fueled investment boom driven by swelling inflows of foreign capital.

The International Finance News, a publication owned by the ruling Communist Party’s official newspaper, the People’s Daily, earlier this month said that the State Administration of Foreign Exchange could use “technical” restrictions, like tightening transaction settlement procedures and strengthening supervision of real estate companies receiving foreign funds or listing overseas.

With foreign investors poised to pour billions of dollars into Chinese real estate, restricting investment from overseas could help slow growth in foreign- exchange reserves and ease pressure on property prices.

“Funds from all over the world are trying to get into the Asia-Pacific, and on top of their list is China,” Guy Hollis, head of U.S. real estate consultant Jones Lang LaSalle’s investment arm. “About $30 billion in overseas funds wants to find a home in China.”

Speculation that China will let its currency gain at a faster pace increases the lure of property. China revalued the yuan almost a year ago and abandoned a peg to the dollar.

“One way that you can bet on an appreciation in the currency is to own assets in China, and real estate has been the favorite one with capital gains being pretty good,” said John Kyriakopoulos, a currency strategist at National Australia Bank in Sydney.

Overseas institutions bought property worth of $3.4 billion in China last year, the SAFE said in April. That did not include “lots” of transactions that can’t be tracked and confirmed, said Remy Chan, Shanghai-based head of markets at Jones Lang LaSalle.

Foreign investors are entering China’s property market by investing in Chinese developers or forming a locally registered entity such as a private equity fund to acquire existing properties. In some cases, foreign lenders are involved in financing such operations, said Jun Ma, head of China research at Deutsche Bank in Hong Kong.

In the past five months, international investment banks and real estate funds have announced plans to invest more than $5 billion in Chinese property.

Source: IHT
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Looking East Originally uploaded by China Chas.

BEIJING will adjust lending and other policies to cope with surging real estate prices, reacting to a potentially destabilizing scarcity of affordable housing and rising financial risks from property speculation.

China’s top leaders met Wednesday and ordered stricter enforcement of curbs on lending and tax policies aimed at discouraging property speculation, State media reported Thursday.

The government has been seeking for nearly two years to rein in excess investment in construction of upscale and luxury housing, warning that a speculative surge in prices could lead to financial problems.

Meanwhile, conflicts over housing have prompted sporadic protests, making real estate a sensitive political issue.

Lending policies will be adjusted to curb demand, the official newspaper People’s Daily cited Premier Wen Jiabao as saying after a Cabinet meeting. The government will also restrict land for expensive housing and offer easier credit for low-cost homes.

The central bank recently raised its one-year benchmark lending rate by 27 base points to 5.85 percent, signaling its desire to cool lending.

Last year, some cities, including Shenzhen, imposed a business tax on sales of property less than two years after purchase. Local governments nationwide were ordered to more strictly control land use rights, to limit credit for property deals, and limit real estate developers’ profits to a maximum of 3 percent.

Property prices rebounded this year as the impact of new taxes and higher mortgage rates imposed in 2005 wane. Home prices in Shenzhen have risen about 25 percent in the first quarter of this year over the same period last year. Average home prices in Beijing jumped 14.8 percent, and those in China’s northeastern Dalian City rose by more than 10 percent, government data showed.

Despite some progress in curbing investments in the sector, prices in some big cities have continued to rise too quickly, the newspaper said, adding that the industry had a “bad supply structure and messy market rules.”

“The government tried to rein in property prices last year and obviously this goal has not been met,” said Zhao Qiang, an analyst at China Everbright Securities Co. in Shanghai. “Prices will continue to soar if nothing is done.”

The government will use tax measures and boost supervision to curb the amount of land used to develop luxury homes, a CCTV report also said Wednesday.

“Local governments will probably issue measures, including raising down payments for purchase of a second home to at least 40 percent of its value from a minimum 20 percent” after the Central Government’s announcement, said Li Huiyong, an economic analyst at Shenyin Wanguo Research and Consulting Co. in Shanghai.

The government aims to cool the market because “soaring” prices have become a focus of public complaints, Zhu Zhixin, deputy commissioner of the National Development and Reform Commission, said in Beijing. There is “serious market disorder” in some regions, Zhu said.

The government may restrict overseas investment in real estate to help cool prices, analysts including China Everbright’s Zhao said. Overseas investors bought at least US$500 million of completed income-producing property in China in the first quarter, compared with US$1.2 billion in all of 2005, according to property agency CB Richard Ellis Group Inc.

Source: Xinhua

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SHANGHAI’S eighth annual spring housing exhibition attracted more developers and home buyers compared to similar shows in the second half of last year as the parties wanted to feel the market pulse after more than half a year of stagnation.
Apartments at an average price of less than 10,000 yuan (US$1,250) per square meter accounted for the majority of the exhibits at the eighth Spring Real Estate Exhibition, which began yesterday and will end on Sunday. It is also the city’s first real estate show for the year.
Developers said they have received signals from the National People’s Congress, which ended earlier this week, that the central government will continue encouraging development of budget homes this year and may unveil further incentives to help more low-income families afford an apartment. “We paid particular attention to this year’s NPC as a slew of regulatory measures last year was issued immediately after a lot of delegates urged action to curb the overheated housing market during the meeting,” said Pan Shiyi, president of Soho China, one of the major developers.
Shanghai’s housing prices and transactions have been deflating since last June, when new taxes aimed at speculators halted a six-year boom during which prices almost tripled. Some developers launched projects without informing customers of the prices as they wanted to gauge buyers’ interest before deciding the prices. China Overseas Property, a developer of a project near the Middle-Ring Road, said it has not firmed up the price when it was promoting the development at the show.
If the project receives a lot of inquires during the show, the developer will set a high price, industry insiders said. Customers find that prices of most projects in the peripheral areas have dropped, but they are still too high for locations in the inner city. Li Zhiwei, a 54-year-old local resident, is now living in a 70-square-meter apartment in the Xujiahui area with his wife and daughter. “It’s impossible for us to afford a larger apartment in the same location we are living now,” he moaned.
He said he may buy an apartment in the Beicai area in Pudong New Area, which is more than 10 kilometers from People’s Square. The apartment costs about 6,000 yuan a square meter.

Source: ShanghaiDaily.com

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The confidence of Shanghai property developers has plunged to its lowest level since 2000 amid a government blitz on rampant real-estate speculation in the city.

The Shanghai Real Estate Confidence Index of Entrepreneurs, compiled by the central government’s National Bureau of Statistics, fell to 95.8 in the second quarter, a drop of 64 points, or 40 percent, from the first quarter.

A reading above 100 indicates positive sentiment, while a reading below 100 reflects negative sentiment.

The latest reading is 50.4 points below the second quarter of last year and the lowest since the first quarter of 2000.

The statistics bureau said most developers it surveyed expect the confidence index to drop further in the third quarter.

Governments at the national and municipal levels have piled on the hurt for property sellers this year in an effort to crimp speculation, which has been especially rife in Shanghai, though it is also a recognized problem in Beijing and Guangzhou. Residential prices in Shanghai rose 44 percent from 2000 to 2004, according to property consultants, Colliers International.

In May, the central government imposed a 5 percent tax on proceeds of home sales within two years of purchase. It also banned the transfer of titles for uncompleted units. Not long before, the Shanghai municipal government imposed a 5 percent capital gains tax on flats sold within a year of purchase.

The statistics bureau said finding money for projects has become the biggest problem for 58 percent of the developers it polled.

“A lot of developers, especially the smaller ones, are finding it very difficult to get further financing for their projects,” said Wayne Zane, Shanghai-based associate director for research at Colliers.

Tenants in areas due for redevelopment were also digging in their heels and demanding better compensation from developers before agreeing to move out, he said.

Zane said a major factor in project delays in the center of Shanghai was the decision early last year to reduce plot ratios, which determine the size of new developments, inside the city’s inner ring road.

“A lot of developers who bought land before 2004 are suffering because the buildable area of their projects has been significantly reduced,” he said.

As a result, many developers, including Hong Kong’s Kerry Properties, were still locked in arguments with government officials over plot ratios.

Some major mainland developers said they had slowed the pace of property investment in Shanghai in the second quarter of the year when property sales fell.

For example, China Overseas Land and Investment, a listed firm controlled by China’s Construction Ministry, said it would focus on developments outside Shanghai because its expects prices in the commercial metropolis to fall by 20 percent this year.

Another state-run company, China Resources Land, said the number of property transactions in Beijing and Shanghai plummeted by more than 30 percent in May alone, though prices in Beijing had not been severely affected.

Beijing Capital Land, the property arm of the city’s municipal government, which recently issued an interim profit warning, said the central government’s austerity measures imposed last year, prior to this year’s targeted anti-speculation measures, had delayed approval of three of its projects in the capital for nine months. As a result, “pre-sales” of uncompleted properties in all three were pushed back to this year from last year.

Christine Mui, a spokeswoman for Shui On Construction and Materials, said the company’s Shui On Land unit had no plans to delay any of its Shanghai projects, though this could change according to the market’s evolution.

Shui On chairman Vincent Lo said Monday the firm might adjust its sales strategy for upcoming launches, by offering fewer units for sale and more for rental, for example.

Source: The Standard