Three reasons to buy Chinese real estate
By Wong Joon Ian June 26th, 2007Andrew Ness, executive director at CBRE Research for Asia, explained why China real estate investments are so special, and why markets like Beijing, which hit 161% growth year-on-year in 2006, remain money magnets, even though everyone is scared of a property bubble.
Ness said investors aren’t looking just at yields, which have been dropping globally for the past decade as investment had driven prices up. Instead, they’re looking at total returns. In China’s case, total returns are particularly good. Its advantages are threefold: Capital appreciation is strong, rents are underpinned by solid demand, and the RMB will be appreciating steadily for the foreseeable future.
Institutional investors and REITs, especially from abroad, don’t need a fourth reason to pour into the Chinese market.
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June 26th, 2007 at 11:12 pm
161% growth? Please explain.
Rents underpinned by solid demand?
Is that a clever use of words to ignore the high vacancies? Or are the high vacancies a myth? Not in my area they’re not anyway.
I can’t figure this market and you’ve just confused me some more.
Terence
June 27th, 2007 at 12:49 pm
Sorry, I was not as specific as I should have been with the figure. From Ness’ slide, it Beijing’s direct investment turnover in the property markets was 161% year-on-year. Guangzhou was 128%, Shanghai 84%. For the other top Asian performers, Tokyo was 24%, Hong Kong 15% and Singapore 45%. The figures are based on CBRE surveys.
You’re right in noting that there are high vacancy rates in some areas; it’s a phenomenon I have heard mentioned. What area are you in?