SHANGHAI - Shanghai shares a high real estate profile with Singapore, Mumbai, New Delhi and Hong Kong as the top five most-favored investment markets in the Asia-Pacific region, a survey shows.
The fifth annual edition of Emerging Trends in Real Estate Asia Pacific 2011, a forecast published by PwC and the Urban Land Institute (ULI), a global nonprofit education and research institute, places Shanghai as the second-most-promising investment market and the third-most-promising development market for 2011 across the Asia-Pacific region. It was number one in both last year.
The report notes that while increases in property prices may have curbed some investor interest, Shanghai continues to have strong appeal.
"Overall, investors still view the high-priced city as being on the path to recovery, and they expect it to remain a target on many investors' radar," the report says. Development in the city is likely to slow as government regulations aim to limit overbuilding and curb speculation, it notes.
"Shanghai has declined in investment-rating value, though it still takes second position. Interest in Shanghai investments might decline as prices climb. Some types of deals, especially office and retail, continue to grab the attention of investors," said Sally Sun, a PwC China partner.
Though the city's performance has not changed much, it was ranked lower this year because other cities got more attention, said Steven Blank, senior fellow of real estate finance at ULI.
Shanghai received 6.0 points for investment in 2010 and 5.9 points for 2011. In terms of development prospects, it received 5.7 points in 2010 and 5.9 points for 2011.
"China remains one of the few economies offering significant growth, and it enjoys the added attraction of having a currency expected to appreciate against the US dollar. However, the Chinese market poses challenges, such as expected changes in property tax rules," Andrew Li, a PwC China partner, said.
But Chen Jie, a professor specializing in property research at Fudan University, believes that a rumored property tax test will hardly effect on the city's residential market.
"From public information and media reports, we can conclude that even if a property tax is just around the corner, it will only affect high-end, luxury apartments, and a tax of up to 1 percent is bearable for the wealthy," Chen said.
Shanghai has long been a traditional entry point to the Chinese mainland market, although this year respondents have also identified the growing appeal of China's second- and third-tier cities.
Unlike Europe or the United States, the report is optimistic about the Asia-Pacific real estate industry's overall prospects.
Based on the opinions of more than 280 real estate professionals, the survey's participants regard Asia as showing the most growth in the real estate industry worldwide.