Overseas firms buy up property
(Shanghai Daily) Updated: 2006-09-29 11:42
China's mainland attracted 2.77 billion U.S. dollars of cross-border
investment in property in the first half of this year, more than doubling the
1.04 billion dollars in the same period of 2005, an industry report said
yesterday.
The cross-border investment in China, which is still completely made up of
inbound investment from overseas, accounts for 58 percent of the nation's total
direct real estate investment of 4.75 billion dollars, according to the report
on global real estate capital by Jones Lang LaSalle.
There are growing concerns the influx of overseas investment will aggravate
speculation in the domestic housing market and put more pressure on surging
property prices and the value of the yuan. Thus, the central government
introduced a string of policies to strengthen the supervision of overseas
investment in real estate in July.
Institutions can only invest in Chinese real estate through mainland
incorporated enterprises.
Investors with total investment of more than 10 million dollars must have at
least half of that as registered capital in the mainland enterprise.
"In the short-term, the new rules will require investors to re-examine their
strategies and to try and work out suitable deal structures," said Terence Tang,
head of China Investments for LaSalle.
But Tang said investors with clear mandates will continue to expand
portfolios in China and more transactions will occur in the rest of 2006.
"Buyers and sellers are becoming better informed and more reasonable about
returns as market transparency improves, thus allowing for an increase in
transactions," he said.
The report said global sources funds were particularly active in Shanghai.
By September 2006, a total of 15 properties worth approximately 1.8 billion
dollars were sold in Shanghai. All were purchased by major overseas
institutional investors originating from the United States, Europe or
Asia. (For more biz stories, please visit Industry Updates)
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