BEIJING, May 27 (Xinhuanet) -- Almost 13 percent of real estate investment in China comes from overseas, and 20 percent of local residence buyers are either foreigners or compatriots from other cities or countries, according to a report on Shanghai's finances just released by China's central bank.
In Shanghai, where housing prices have been rising
amazingly fast in the past two years, the average price in urban and suburban
regions has exceeded 10,000 yuan (some 1,200 US dollars) per square meter.
Some overseas investors, expecting RMB/yuan
appreciation, have bought dozens of apartments in China's coastal cities,
including Shanghai, according to the State Administration of Foreign Exchange.
Many local Chinese have joined in on the speculation, hoping to profit from a
jump in housing prices.
In the first 11 months of 2004, over 22.2 billion
yuan (2.67 billion US dollars) in overseas funds rushed into Shanghai's
real-estate market, 15 billion yuan of which were used for housing development,
12.7 percent of the total investment in Shanghai's real estate development.
Currently, investors from overseas can directly buy
local property with foreign currency or Renminbi. Since 2004 foreign investors
altogether bought 3.95 million square meters of houses in Shanghai, soaring 85
percent year on year, the report said.
"Overseas investors prefer expensive housing, and 70
percent of high-class houses in downtown Shanghai were sold to overseas
purchasers after last October," said an insider who declined to give his name.
During the Jan.-Nov. period in 2004, about one
million square meters of commercial housing with prices above 11,000 yuan per
square meter were purchased with overseas funds, almost tripling from the same
period in the previous year, according to official statistics provided by local
real estate administration.
Starting last year, names like Merrill Lynch and
Morgan Stanley Investment Bank constantly made headlines for completely taking
over real-estate projects in Beijing and Shanghai.
International fund management companies like Morgan
Stanley andLehman Brothers began scrambling for Shanghai's real-estate market.
They either directly bought residential apartments and office buildings or set
up joint ventures for future estate business.
According to the Economic Information Daily, a
retirement-fund management company from Singapore and a German bank are in talks
separately with Beijing Capital Land for property in the Zhongguancun district,
the so-called "Silicon Valley of China".
Headquartered in Shanghai, the Yangtze Special
Situations Fund,with investment from both America and the Shanghai Industrial
and Development Company Limited, left no doubt about a 30-million-US-dollar
debut purchase of a luxury residential high-rise in Beijing.
In 2004 the total investment made by foreign-funded
real estatefirms jumped over 65 percent year on year in Shanghai. Currently
there are 448 foreign-funded estate development companies in Shanghai, with
registered capital of 73.3 billion yuan (about 8.83 billion US dollars), up 35
percent from 2003.
The inflow of foreign funds into China's real estate
market notonly raises housing prices, but fosters speculative activity,
acknowledged Cai Weimin, secretary of the Taiwan Real Estate Policy Institute,
which often gives advice to Taiwan compatriots on house purchases in Shanghai.
In 2004, an overseas individual once bought a total
of 115 apartments in Shanghai, where almost 20 percent of the houses bought by
foreign investors were sold again in a year.
Some experts, worrying about the property bubble
created by foreign speculative funds, suggest stricter measures be taken to
restrict such inflow. The "hot money" has pushed housing prices toa very high
level, making some cities look "prosperous", but does no good to the investment
climate as it leads to higher living and business costs, they say. Enditem