Printer Friendly Version
Hot money in China- Hurdles to real estate investment
29 Aug, 2008, Asia Pacific
Real estate investment is the latest frontier in fighting hot money flows into China, according to a recently published report by Cushman & Wakefield, the world’s largest privately held real estate firm.
Overcoming Hurdles to Investment, from the firm’s Asia Report series, explains why and how the Chinese Government has introduced new regulations that make it more difficult for foreign investors to invest in Chinese real estate.
The author James Hawkey, details how real estate development in China, the fastest growing property investment market in Asia, grew by 32% over the last year and investment transactions in commercial real estate reached US$ 15 billion, more than double the activity seen in the country previously. A fall-out of this unabated growth is the ‘hot-money’ that is entering the market for short-term gains.
This has prompted the Chinese government to introduce regulations that make it harder for foreign investors to invest in China. The Circular 171 regulation requires overseas investors with an interest in completed buildings to establish an onshore Wholly Foreign Owned Enterprise (WOFE) or a Joint Venture before investing. It also outlines requirements for registered capital oft 50% of total investment for major investments. Interest rates have been increased (now in excess of 10%) to tighten the money supply and make debt financing harder. IPO’s are being shelved because of market conditions.
Though a deterrant, foreign investors are still entering the market and have figured out ways to circumnavigate the regulations. They are much more flexible in their dealings and are looking at acquiring minority stakes and strategic partnerships with major market players. However, there are a few who have quit as they have been 'regulated out of business'
Dr. Megan Walters, Regional Director - Research & Business Analytics Group for Cushman & Wakefield in Asia Pacific says,"Despite the current regulatory environment, there are still enormous opportunities for the patient investor who can understand the intricacies of the China market. The fundamentals of the economy are strong, and opportunities across sectors and geogrpahic locations abound."
For further information, please contact:
The Press Office
Cushman & Wakefield
Tel: + 65 6535 3232
Visit Cushman & Wakefield’s Knowledge Center at www.cushmanwakefield.com to access this and other reports on leading real estate issues, trends and market statistics from around the world.
Note to Editors:
1. Cushman & Wakefield is one of the world’s largest commercial real estate services firms. Founded in 1917, the firm has 221 offices in 58 countries, and 15,000 talented professionals. Cushman & Wakefield delivers integrated solutions by actively advising, implementing and managing on behalf of landlords, tenants, lenders and investors through every stage of the real estate process. These solutions include representing clients in the buying, selling, financing, leasing and managing of assets. The firm also provides valuation advice, strategic planning and research, portfolio analysis, and site selection and space location assistance, among many other advisory services. To find out more about Cushman & Wakefield, visit www.cushmanwakefield.com
2. In Asia Pacific, C&W’s Research and Business Analytics Group is lead by Dr Megan Walters. Dr Walters is a Chartered Surveyor with 20 years experience in real estate and holds an MSc from the University of Reading and a PhD from the University of Hong Kong.
back to real estate News & Events
|
