Property buyers face new regulation
By Fei Ya (China Daily)
Updated: 2006-06-14 09:08 According to Stephen M Coyle, chief investment strategist of Citigroup
Property Investors, the return on investment is 7 per cent in China, much higher
than Japan's 3.5 per cent, Britain's 4 per cent, and the United States' 4.5 per
cent.
"It is mainly because China is on a rapidly growing plane," he
said. "Comparatively, the speed in the United States is slower."
Foreign
executives believed that the nation's booming economy would support the property
market's growth, which will be among the world's best performers in the next
three years.
They pointed out that a fundamental demand existed for an
economy that has grown at an average 10 per cent for the past three years,
especially in the east of the country.
Commercial offices, top-end
residential housing and industrial properties are the top choices for overseas
investors.
But does the yuan's potential to rise in value account for the
flow of overseas capital into China's property market?
"It is not a wise
move for us to bet on the appreciation of the yuan," Morgan Stanley's Carth
Peterson said.
"The investment bank's real estate sector has no
speculation on the yuan's appreciation," Peterson added.
Foreign
executives denied that there is speculation on the foreign exchange rate;
neither did they admit there is a connection between rising house prices and
overseas capital.
"Overseas capital is mainly invested in top-end office
buildings for the long term with the aim of getting profit from rentals," Yin
Kunhua, a professor at the Real Estate Research Center of the Shanghai
University of Finance and Economy, said.
Even though overseas investors
are focusing on the commercial sector, some still believe that they are
contributing to rising house prices in China's cities.
"Overseas capital
is strong enough to influence the market and lead the price higher, and small
investors in the sector sometimes have to follow them," said Chen Min, a private
real estate investor.
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