In the past two weeks after the Sichuan earthquake, a lot of investors became jittery.

Almost daily I'm asked about the potential loss to the real estate investors who invested in Sichuan. Many also worry about their investment in other parts of China, and are skeptical about the building safety standards in China

In larger cities like Shanghai, authorities enforce strict regulations. But the regulations might not be as stringent in rural areas.

However, people might be too impulsive jumping into conclusion regarding the building safety standards in China.

Even though in Sichuan province, new buildings are built to withstand a shaking level of 7, the 8-magnitude quake produced a shaking intensity of 10 near the epicenter, which results in total collapses.

China is jolted by thousands of earthquakes every year, at least several of the major ones cause significant damage and loss of life.

Since the 1976 quake in Tangshan near Beijing that killed at least 240,000 people, the government has tried to improve building standards. According to a report by Associated Press, Susan Tubbesing, head of the California-based Earthquake Engineering Research Institute said that China had been taking earthquake safety very seriously for the past 10 to 20 years and that the code China has adopted has been "good, solid, and seismic".

Even so, I do notice that few developers in China, unlike other Seismic regions of the world, offer the minimum safety endorsement in the buyers agreement, even though they have followed the Earthquake Safety Standards.

The agreement between the buyer and developer would certainly contain the clause that if the electricity bills are not paid in time, the electric supply to the apartment would be stopped but how many times do we read that in case it is found that the building does not meet the minimum earthquake safety requirements spelt out by the government, the builder would be held responsible?

It is time the consumers/investors started demanding these clauses to be included in the buyers agreement in addition to clauses that warn them of the electric supply being stopped.

As far as the real estate in China including Sichuan is concerned, the prospect is still bright. What the real estate investors need to be doing is deliberate evaluating if he is making the right investments, by getting relevant provisions endorsed in the buyers agreement.

The author is managing director of Vigers Asia Pacific Holdings.

(HK Edition 05/28/2008 page3)