Overseas firms increase investment in real estate sector
(Xinhua)Updated: 2007-03-04 09:14
On January 30, the US private equity firm Warburg Pincus set its foot in the Chinese mainland's real estate sector by purchasing a 25 percent stake in Shanghai Zhongkai Real Estate Development and Management Co for 30 million US dollars.
On February 17, the ING Group of the Netherlands acquired a 49 percent stake in a subsidiary of the Shenzhen-based real estate giant Gemdale Group.
A total of 8.23 billion US dollars of overseas capital was invested in the Chinese mainland's real estate sector in 2006, up 51.9 percent year on year, according to figures from the National Bureau of Statistics.
The increasing trend will continue this year, said the report, adding that the pursuit of high returns are the fundamental reason why overseas companies are coming in droves to buy stakes in the sector.
A recent report from the Deutsche Bank's real estate investment advisor RREEF shows the gross profit rate is 20 percent to 30 percent for Chinese housing projects and is likely to surpass that for American ones in the future.
Meanwhile, investment in office building yields eight percent in Beijing and Shanghai, compared with seven percent in New York, Chicago and Toronto and four percent to five percent in Paris, Sydney and Hong Kong, according to a report from the CB Richard Ellis, the world's leading real estate services firm.
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