Asian Property Markets – China outlook 2008

Asian Property Markets – China outlook 2008

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The Japanese company, Sumitomo Forestry, is aiming to quadruple their sales of houses in China, hoping to achieve sales of around £4 billion by the end of 2009. The Sumitomo Forestry Company has a minority share holding in Paragon Wood Products (30%), a company that builds wood framed houses. At the moment, Sumitomo build very few units, but are planning on building 100 units a year.

Sumitomo were recently selected to become a member of the DJSI World (Dow Jones Sustainability World Indexes), which is one of the leading global index of socially responsible investment. This is the second year in a row they have been accepted.

Sumitomo Forestry Co LTD

Overseas investors are taking a good hard look at the Chinese market in general. The China Tourism Investment talks on Ningbo recently saw more than 30% of the visitors were from overseas, and more than 25% of the investments made in China’s tourism industry was from overseas investors.Overseas capital investment continues to increase and The World Tourism Organization is predicting that China will become the world’s largest tourist’s destination by the year 2020. By far the bulk of investments made in China come from the U.K, Hong Kong and the United States.

The World Tourist Organization

According to the World Bank, China has the fastest growing economy in the World, consistently achieving growth of around 9% per annum since the late 1970’s when their policies changed, becoming more open. China continues to grow at a fast, but sustainable rate and barriers to direct foreign investment continue to fall.The World Bank

According to Amberlamb, it is a fact that property prices in Shanghai are undervalued when compared to other great cities worldwide, this will likely change as the wider world learns of the attraction of the city and the potential for profit in Shanghai and subsequently the demand for property further increases.Demand for property in Shanghai will likely surge following the promotion of the city during the 2008 Olympic Games and the 2010 World Expo.The Chinese government has just released the country’s currency from its US dollar ties because the ties were keeping the Yuan undervalued by up to 40% – this will start to increase the intrinsic value of property assets held immediately and for the short to medium term.

And finally, the Chinese Housing Reform has been increasing local real estate ownership figures by around 10% annually creating a huge local market for a property investor to target and rely upon to strengthen in purchasing power and demand.

Investment conditions are ripe and the long term prospects for the profitability and sustainability of the Chinese property market are exceptional.