More foreign capital flows in property sector

By Song Hongmei (
Updated: 2007-08-08 14:54

An increasing amount of foreign investment capital flowed into China's real estate market between January and June, according to the National Bureau of Statistics (NBS).

Data from NBS show that in the first half of this year, realized foreign investment in the property sector accounted for 24.1 percent of the country's total used foreign capital, 11 percentage points higher than the whole of last year.

Foreign investment in property projects averaged US$7.04 million between January and February, up US$3.61 million from last year's average, while investment averaged US$7.17 million between January and March, up US$3.74 million.

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Housing in China

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During January and February, 18 foreign companies invested more than US$2 million each in Southwest China's Sichuan Province. More than half of them invested in the province's booming real estate market. A total of US$169.15 million realized foreign capital was recorded in the property sector, making up 79.3 percent of the province's total.

The growth rate of foreign capital in China's property sector surged 154.4 percent on a yearly basis in the first three months, 101.4 percentage points higher than all of last year. That was also 127.5 percentage points higher than the growth rate of total investment in the property sector during the same period.

Growing foreign investment in the property sector will propel unbalanced development of housing supply in China, as most, if not all, of the investments go to medium-to-high-end housing markets, some analysts said.

China's vacant commodity residential buildings of key property developers totaled 22.42 million square meters in floor space last year, and more than 70 of them were units of more than 100 square meters each.

Analysts attributed the increasing vacant housing mainly to the short supply of affordable housing for lower income earners and the escalating housing prices to speculative purchases of medium-to-high-end houses.

Moreover, more foreign capital in the property sector may create tighter competition for other sectors for sources of funding.

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