Thanks to the Chinese government’s attempts to slow development and halt the growth of a burgeoning housing bubble in the country, foreign investors – and their money – are in high demand in the Chinese real estate market[1]. Although many foreign investors pulled out of the market two or three years ago, “they are back,” says Jones Lang LaSalle global real estate consultant David Hand. Furthermore, they are looking for returns of 10 to 12 percent on their money and want close involvement in company management. These are much higher demands than before the lending crunch in China, but developers are willing to make these concessions because it is just about the only way to raise money in the country right now since China has tightened bank lending almost to nonexistence and developers cannot raise funds in the Chinese stock market.
Foreign investments in the Chinese market have been surging since the first quarter of 2010, which showed a year-over-year increase of 33.7 percent in this arena[2]. Since that time, foreign investment volumes have continued to climb, with the China Securities Journal estimating that China’s 2010 real estate industry contained foreign investments in excess of ¥150 million. While foreign investors appear eager to take advantage of the opportunities in China, the Chinese government cautions that “hot money” flowing through “illegal avenues for short-term speculative investments” could not only undermine its efforts to keep the housing market in check, but also result in serious problems for both borrowers and developers over the long term. As a result, the Chinese Ministry of Commerce will enact stricter reviews on foreign-invested property projects as well as increase levels of supervision on real estate projects.
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[1] http://www.reuters.com/article/2011/03/29/china-property-investment-idUSL3E7ET21Y20110329
[2] http://www.china-briefing.com/news/2011/03/29/foreign-participation-surges-in-china%E2%80%99s-property-development.html
Welcome to dealing with a communist government. Looking at this numbers would make even Madoff blush, maybe they are following his system! LOL
Look at the Ghost Cities of China, that will tell you everything one needs to know about investing in Chinese real estate!
“…“hot money” flowing through “illegal avenues for short-term speculative investments”, isn’t going to undermine anything. In The U.S. it’s called The Black Market and it happens every day proving my point.