The Chinese real estate industry is set to receive a much-needed boost which may include an easing of restrictions on the purchase of second homes, the expansion of funding channels for developers and a further cut in the taxes and fees associated with property purchase in China.

The plan is part of the government’s efforts to keep the country’s economic slowdown at bay. It is busy on a package of plans to revive ten key industries to keep China’s GDP growth above 8% and has already approved similar plans for the steel, textile and car industries. The property industry is one of the biggest drivers of China’s domestic economy. It contributes a quarter of fixed-asset investment and employs around 77 million people, so it is a prime candidate for a lifeline from the government.

Although the plan is still waiting for approval from China’s Cabinet, the State Council, industry experts say that the government is keen to keep the property sector buoyant and is concerned that it has recently suffered from sluggish sales. According to the president of China Real Estate Chamber of Commerce, Nie Meisheng, the draft plan will be discussed at the annual National People’s Congress on 5th March. He said the plan will include suggestions for affordable housing, more policy support on loans for real estate firms and more innovative financial products to meet property developers’ financing demands. If the plan is passed, it is hoped that the Chinese property market will improve in the second half of 2009. Nie added, “Whether the government passes the plan or not, the property market has its own operational discipline. What the outside forces can do is to speed up or slow down the correction process.”

Industry experts welcomed the loosening-up of government policies, but warned that there are still issues that need to be addressed to ensure stimulation of and sustained growth in the market. Although the Chinese Central Bank is proposing the establishment of real estate investment trusts (REITS) to ease the cash flow problems for developers, there are still other barriers to investment which need to be addressed. These include the double taxation imposed on both property assets and the dividend payment of REITs as well as the government’s restrictive policy on foreign investment in the real estate sector.

James Gonzalez, Market Analyst at Obelisk Investment Property, says that there is general agreement within the industry that this package of measures can only have a positive effect on the Chinese real estate sector, “however, there is a long way to go and if the restrictions on foreign investment are lifted, then China will certainly be a market to watch.”

News submitted by Alison Kane, Obelisk International

In the midst of a crumbling economy, The People’s Bank of China has slashed interest rates by more than one per cent – the largest rate cut in 11 years..

Whilst this latest cut is the fourth interest rate cut from the Chinese central bank in the last ten weeks, economic growth remains stalled and the economy slides close to a recession.

The cut, which sees the People’s Bank of China’s main borrowing rate reduced by 1.08 per cent to 5.58 per cent, is the biggest one off cut since the Asian Financial Crisis in 1997.

It is the latest in a series of measures designed to spur private borrowing and support a multibillion-pound stimulus package to boost slowing economic growth.

The reserve requirements of Chinese banks were also cut by one per cent and two per cent for smaller banks, freeing up around £34 billion for lending.

The Chinese Government has also announced a £373 billion bailout to stimulate domestic growth by investing in infrastructure. However, only a fifth of the money is likely to come from central Government coffers, with the rest coming from a mix of private enterprise and local Government funds.

“We’re seeing a Government that steps in, that is trying to do everything it can to keep growth at a decent rate, and has the financial means and the administrative capacity to make that happen,” said Louis Kuijs, Head of the World Bank’s China Economics Analysis.

The fall in borrowing costs could also help rejuvenate the China property market which has slowed of late. Trading volumes in Shanghai’s residential property market have already staged a recovery in the last two weeks following the Government’s decision to introduce a stimulus plan last month. Statistics show that property sales in Shanghai last week rose 24.6 per cent.

Whilst the Chinese economy is still expected to grow by 7.5 per cent next year, which by some standards sounds like a lot; for China, it is a 19 year low.

The benchmark one-year lending and deposit rates will both be reduced today by 1.08 per cent to 5.58 per cent, with the benchmark one-year deposit rate cut by the same mount to 2.52 per cent, the People’s Bank of China said in a statement.

News submitted by Jon Moore, The Move Channel

If you like the high life, you may be interested to hear that construction has started on what will be China’s tallest building, Shanghai Tower and one of the ten tallest buildings in the world…

Designed by Texan Architect Marshall Strabala, of Gensler Architects, the 120 storey Shanghai Tower (pictured) will spiral upwards to a height of more than 2070 feet.

The new £1.5 billion tower will be in the shape of a soft triangle with two walls made from glass and steel that rotate as they head skywards and finish in an open top design. As the shape rises, an open notch curves up and around the building which is an engineering feature to control the wind up and away from the building.

South of Jin Mao Tower in the Lujiazui Finance & Trade Zone in Pudong New Area, Shanghai Tower will have a total construction area of 576,000 square meters, including 380,000 square meters on the ground.

Gensler sold its design on several ‘green’ features; the tower’s twisting glass facade and double-skin exterior is expected to save on both building materials and energy usage once completed. It will generate some of its energy from wind turbines.

Mr Strabala said, “With the double skin, the building will function much like a thermos bottle.

“This allows us to harvest and use daylight, reduce artificial lighting to a minimum, increase the insulation of the building’s interior and, long-term, dramatically reduce energy consumption and energy costs,” he added.

On another green note, the building will be situated within a 10,000-square metre open green space that will become both a public park and the front entry to the tower.

Mr Strabala, who says this tower has been his most ‘exciting and demanding project yet,’ has lived in Shanghai for the past year overseeing the building as Director of Design.

He is no stranger to the high life, having already worked on three of the world’s tallest buildings, including the 160 storey Burj Dubai in Dubai and the 420-meter Nanjing Greenland Financial Center in China, which will be completed in 2009.

The new Shanghai Tower will feature office space, luxury residences, a high-end hotel, retail space, restaurants and a public observatory.

The development will be separated into nine distinct bioclimatic zones, with each having its own atrium, lush gardens, indoor air controls and panoramic 360° views of China’s largest and most populous metropolis.

Gu Jianping, Manager of city-owned Shanghai Tower Construction & Development Co., “Launching construction at this time will help boost Shanghai’s confidence in fighting the financial crisis.”

The Tower is scheduled to open partially in 2012 when the top floor is finished. The skyscraper will open fully in 2014, according to Gu Jianping.

“Shanghai Tower will represent China’s dynamic future,” said Strabala. “It will be an impressive building where China looks ahead to both the future of this bustling and ever-changing metropolis, but also to the future of the dynamic Chinese spirit.

“There will be no other such unique and well-conceived tower like it anywhere in the world,” he added.

Shanghai Tower’s upward spiralling form will become a ‘vertical city,’ a structure comprised of eight separate neighbourhoods that become ‘plazas in the sky.’ It is tipped to become one of the world’s architectural treasures.

News submitted by John Moore, The Move Channel

The World Tourism Organization recently conducted a study which projected that China would become the one of the largest markets for tourism within the next seven years. The total revenue from tourism in China last year was well over $150 billion.

At last months International Tourism Fair in Beijing, Cape Verde was one of more than seven hundred exhibitors from over eighty different countries, agencies of travel, as well as foreign and Chinese offices of tourism, there to promote themselves as tourism destinations and with a view to attracting not only Chinese tourists by potential investors too.

According to the secretary of the embassy in Beijing for Cape Verde, Jose Correia, “the potential for tourism in China is among the highest, and the intention is to attract tourists from China to Cape Verde and help Chinese companies find an interest in the packages of Cape Verde.”

The travel marketplace is an industry which is rapidly expanding in China alongside India and Latin America as the citizens of these developing nations begin to enjoy increased personal wealth.

With this summers Beijing Olympics as a launch pad, China has been enjoying double-digit growth in its own tourism figures which have doubled in the past five years. China is expected to overtake France already threatened by new emerging resorts, as the number one tourist destination by 2020 and number two Spain within a decade. The Chinese capital is preparing to receive 500,000 overseas visitors during the 2008 Summer Olympic Games from August 8-24, up from 350,000 visitors in August 2006.

This year alone China’s tourism industry is expected to generate US$78 billion, 2.5 percent of GDP, a figure that could rise to US$277 billion by 2017, according to the World Tourism Organisation. Ignore the tourism potential of China at your own peril !

When you consider that the Chinese tropical hotspots of Hainan and Yunnan attracted some 18 million tourist visitors last year, yet only 750,000 were from foreign lands, the problem starts to become a little clearer. While China has so much to offer and is investing billions of dollars into its infrastructure, improving transport networks and massive advertising campaigns, the visitors to chinese beach resorts are just not appearing but why?

Despite having the largest population in the world, a history which goes back centuries and a culture which is full of mystery and intrigue, the market for Chinese tourism has yet to tap into the global tourism industry. The Chinese tourist industry in many ways it is still suffering from the stigma attached to the old way of rule with only major industrial hubs operating with more commercialism, more western influences and a free market economy starting to take hold. If only the Chinese authorities could actually overcome the widely held international view of the country, there is so much to gain for all parties. Beautiful places to visit for tourists, much need income for local communities and an improving international opinion of the region. There might even be a lucrative second homes market in the making for chinese beach property.

That said, many of these tourist hotspots are in desperate need of further investment, and the need to attract the Western tourist has never been more vital. As we approach the onset of the 2008 Olympic Games, conflict and friction in the region seems to be clouding the bigger picture yet again.The hope is that the 2008 Games will offer China the perfect opportunity to persuade the international community that they have so much more to offer, besides its big cities and Great Wall.

Dubbed the Hawaii of China, the tropical resorts have been the stunning backdrop to past Miss World beauty pageants and major international hotel brands are already investing with one eye on future tourism revenues. Luxury hotel brand, Kempinski already operates a resort and with Ritz-Carlton set to open up in 2008 many believe this will be the tipping point for China’s beach resorts which rival the likes of Bali and Thailand’s Phuket.

China’s domestic tourists are currently fuelling a tourist boom with 18 golf courses already built and 10 more planned. Plans are also underway for a dubai-style seven-star deluxe hotel project due to open in 2011.

Whilst China’s mega cities may already be attracting international property investors, china’s beach resorts might be an up and coming overseas property market to be watched.

According to reports, the Shanghai Housing, Land and Resources Bureau (SHLRB), is working on implementing a new property purchase system for non-permanent residents, but pointed out that workers on temporary permits would be exempt from the restrictions. The moves are in direct response to a State Council of China circular which instructed local authorities to do more to help China’s low-income urban families find affordable housing. Foreigners were also hit by a move by the SHLRB which now restricts buyers of residential and commercial land to using renminbi (yuan) only in another attempt to remove foreign speculators from the market.

However, the moves have been welcomed by those keeping an eye on the situation, which has seen record numbers of families priced out of the domestic property market in recent years by high property inflation. Additionally, the action to restrict foreign investment is expected to be an effective measure to stabilize housing prices in Shanghai, which have leaped up by 7.9% in the past 12 months.

Hong Kong has been rated as the most economically friendly country in the world by the The Heritage Council released its 14th annual 2008 Index of Economic Freedom last week and it certainly makes for some interesting reading. The index takes 162 countries and compares them, examining 10 different economic policies including business, trade, fiscal, monetary, investment, financial and labour freedoms together the country’s property rights, the size of the country’s government and the freedom from corruption that a country enjoys.

Top of the list was Hong Kong, with an overall score out of 90.3 out of 100 followed by Singapore (87.4), Ireland (82.4) and Australia (82). The US (80.6) and the UK (79.5) ranked fifth and tenth respectively. Europe (66.8) reigns supreme as the world’s most economically friendly region, followed by the Americas (61.6), Asia-Pacific (58.7), Middle East and North Africa (58.7) and sub-Saharan Africa (54.5). Europe’s consistent success in the Index has been attributed to its determination to advance its economic freedoms through policy improvements such as tax cuts and other business climate reforms, as well as a healthy sense of competition between member states as they compete with one another to attract more investment. There were some relative surprises: two of the world’s fastest growing economies, China (52.8) and India (54.2) only earned
126th and 115th respectively, largely due to their low ratings in the areas of labour freedom, property rights and corruption. However, the report was eager to point out that, if appropriate economic reforms and measures were to be put in place in these two most bullish of markets, “the rise in global prosperity will be spectacular”.

Top 10 Most Economically Friendly Countries

1 Hong Kong (90.3)
2 Singapore (87.4)
3 Ireland (82.4)
4 Australia (82)
5 United States (80.6)
6 New Zealand (80.2)
7 Canada (80.2)
8 Chile (79.8)
9 Switzerland (79.7)
10 United Kingdom (79.5)

As property watchers the world over have their eyes glued to the US sub-prime rollercoaster, it seems that another big player is about to fall foul of overenthusiastic property speculation and dodgy lending habits. Faced with rampant inflation, skyrocketing property values, no-deposit loans and 400% stock market growth in 2 years, in order to tame the fiery Chinese property market, the government is pulling on every Communist brake it can find in order to enforce some discipline on its increasingly capitalist economy, which is seeing property values drop and vacancies of up to 40% in some new developments.

The government has tightened restrictions, alerted by the US crisis, but experts have accused officials of simply ‘tinkering at the edges’ of the problem, suggesting that they are walking headlong into a situation similar to the one that crippled Japan in the 1980s.

Interest rates in the country have been raised five times this year and the central bank has increased reserve requirements for commercial lenders eight-fold. Last month the central planning agency imposed a price freeze on cooking oil, electricity, water and other household essentials to try to stem inflation that had hit an 11-year high, in an effort to reduce inflation below 6%. Thanks to a big fall in the price of pork, China’s annual inflation fell from 6.5% in August to 6.2% in September.

However, experts are divided on whether the hardline methods taken by the Chinese government to cool the economy will be effective; some contend that pulling out every Communist stop in the book could have far reaching consequences affecting industries beyond the property markets, while others feel that the government should actually be doing more to balance the books by urgently shrinking private consumption as a percentage of gross domestic product. In a country whose growth has redefined the concept of ‘bullish market’, spending and investment have been unparalleled with citizens and investors alike reaping huge rewards in capital gains. How the government now deals with the increasingly unbalanced situation is crucial if a massive property price correction is to be avoided, especially in light of the fact that 80% of urban homes are owned by private citizens. The value of housing loans awarded in China stands at nearly $US450 billion ($503 billion) so far this year, a huge concern considering that banking laws are still being written and a credit rating system does not exist, enabling bad creditors to enter the market with impunity. Even though Chinese mortgages are not securitized as they are in the US, meaning that the risk is owned by the lender, banks in China are nonetheless the sole source of funding for the majority of Chinese businesses.

If the economy cools to the extent that people default on mortgage payments, bank lending will be restricted which will slow or even cripple wide scale economic growth, widely anticipated by experts to be a likely scenario; they see annual economic growth plunging from its current double digits to around 5%.

However, this cloud may have a silver lining: although the last thing the US market needs is a major adjustment in the value of the yuan, there have been rumblings from the Chinese government about the possibility of large scale sell offs of US bonds – a definite blessing in disguise for the US.

From its unique cuisine to its incredible sights, China has appealed to Westerners for centuries.  This country has stolen the heart of many an adventurer and now it is winning the confidence of property investors.  Indeed, China property investment is a very appealing prospect for many.

With its booming tourism industry, growing economy and stable government, China has the interest of many buyers.  We at Nubricks.com cite the following 10 reasons as those driving investor confidence in China property investment at the present time:  -
 

1) Stable Government Lends Itself to Inspiring Investor Confidence

China does have a communist form of government, which does turn some investors off.  Despite this, the governmental stability here is quite impressive.  The ruling party has been in place since the 1940s, ushering China out of its shell and into worldwide prominence as a manufacturing giant.  The country’s stability does inspire confidence among many investors who seek markets backed by strong governments with longstanding track records upon which they can base certain forward assumptions

2) Strengthening Ties with the UK and other Countries Inspires Confidence

China has been working very hard to develop stronger economic and political ties with the UK and other foreign countries.  With the upcoming 2008 Olympic games, the eyes of the world remain on this country.  Overall, relations between China and the UK are quite strong, which works very well to inspire British property investor confidence in this market in particular.

3) China’s Booming Economy Very Much Inspires Real Estate Investor Interest

China is a country of financial contrasts, but its overall economic picture is very strong.  The country’s GDP was USD 2.22 trillion in 2006 – the growth rate comes in at a whopping 10.7% per annum.  The economic growth and stability of China work well to inspire investor confidence in this market.  The economy itself is driven by manufacturing, tourism and agriculture and is so rapidly expanding that it is attracting massive interest.

4) The Growth of China’s Real Estate Market Appeals to Property Buyers

Although the Chinese government has put programmes in place to keep growth in the real estate market in check, investors are finding the luxury market here still offers much potential.  The growing demand for high-end properties is raising prices and interest among foreign investors.  Rather than purchase directly, some foreign investors are buying stock in development companies.  Others are buying directly for personal use and eventual resale.  The overall interest in this nation’s property market is very high.  Investments in the market climbed by 31.4% in the first 10 months of 2007, according to the National Bureau of Statistics – this amounts to about USD 259 billion.  Despite some obstacles, many investors are finding the potential here is very inspiring.

5) China’s Ever-Growing Tourism Industry is Very Appealing

Interest in touring the Orient has appealed to Westerners for centuries and the draws of China continue to be incredibly strong.  With a huge 6.2% of the world’s market share for tourism demand, China commands a holidaymaking industry that is worth an awesome USD 439.8 billion for 2007 alone.  Demand here is anticipated to grow by 9.6% per annum through to 2017, according to the World Travel & Tourism Council – this figure is massively above the global norm.  Whilst catering directly to the holidaymaking crowd through buy-to-let strategies is difficult, the extreme interest in China does inspire investor confidence.  With a strong and growing property market, foreign investors are finding it is still possible to buy directly for resale and to cash in via ownership in development corporations directly or simply through stock purchases.

6) China’s Unique Geography and Climate Diversity Help it Appeal to Holidaymakers, Expats and Investors

China is a vast country with diversity in both geography and climate.  The country’s landscape includes mountains, plateaus, rivers, plains and other distinct features.  It borders the Yellow and East China seas and the Pacific Ocean with extensive coastlines.  The climate ranges from extremely seasonal in the north, with arctic winter temperatures, to subtropical in the south.  The diversity appeals to holidaymakers, expats and investors with different ideas of “perfection.”  China’s geography and climate offer something for just about every taste imaginable.

7) China’s Exotic Sights Appeal to Holidaymakers, Expats, Retirees and Investors as well

From the Great Wall and the Silk Road to the Forbidden City and the legendary Yellow River, the landmarks of China are exotic and appealing.  The unusual sights found in this cradle of civilisation have long captivated holidaymakers, expats, retirees and investors and they continue to do so.  Whilst direct buy-to-let strategies are difficult to maintain under regulations, investors are finding real estate stock investment and resale potential continue to grow thanks to the unusual draws China offers.

8) Cost of Living Can Fit Many Budgets, making Property in China Appeal to Many

The cost of living in China runs a rather wide range.  Expats who choose to live by Western standards can expect to pay Western prices.  The bigger cities do command higher prices, as well.  However, it is possible to stretch income by doing things more like the locals.  When non-imported goods are used to meet most needs and the standard of living is modest, expats find their money can spend incredibly well.  The ability to have what many see as the best of both worlds appeals to expats and investors.

9) The Present and Growing Expat Community Helps make China Property Appeal

China has long appealed to foreigners in search of adventure.  Even now, an estimated 30,000 Brits alone live in this country.  More foreigners are coming in all the time to take teaching posts and other crucial positions.  The existing and growing expat community does help make holidaymakers, expats and investors feel more at home in this land of mystery and wonder.

10) Favourable Exchange Rates are Very Appealing to Investors, as are Reasonable Chinese Real Estate Buy-In Prices

The exchange rates between the British pound and the Chinese renminbi are very encouraging for Western investors.  With a single pound worth about 15 renminbi, many Brits find their money spends quite well in China.  Whilst living, buying and touring by Western standards can cost a fair amount, doing things like the locals do can really stretch a pound.  The exchange rates encourage investment and tourism.  The buy-in prices for property in China also appeal.  It is possible to purchase two-bedroom, two-sitting room flats for under GBP 90,000 in high-end areas for example.  Buying Chinese property is a little tricky, but most investors are encouraged by the potential resale returns.

Whilst buying property in China isn’t the easiest of prospects, many investors are drawn to this country for its unusual landscape, culture and sights.  Investors here are finding good returns on direct buys and even on the purchase of stock in Chinese real estate development companies.  This land of mystery has long intrigued the West and it seems the love affair continues.

The marketing behind the Olympic Games is hugely influential in the Games success for the host nation and the logo is an intrinsic part of how the host country is perceived through the eyes of watching outside world. The success of the Olympic Games has historically had a major impact on pushing up real estate prices and previous cities such as Barcelona, Sydney and Atlanta experienced massive foreign investment both prior to and after hosting the Summer Olympics in addition to a slew of tourism revenue. Property prices in Shanghai and Beijing have rocketed with speculative investment in real estate developments rife, the Chinese Government have introduced new property laws to restrict investment by foreigners.

House prices in London are already some of the most expensive in the world but savvy property investors have been buying up property in and around the proposed Millenium Dome Olympic venue of Greenwich and Hackney, which despite being branded one of the worst places to live in the UK is seeing regeneration on a mammoth scale.