According to Soho China, a Beijing based developer, recent attempts by the Chinese government to rein in runaway property development are creating a host of unintended problems for local and foreign-invested property companies.
Soho, which is privately held, has taken a strategic decision to leave the residential sector strictly alone. Our illustration is of a Soho development on Hainan which is not proceeding well. That feeling may extend to other investors, especially those from overseas, investing in other areas.
A desire to cool down the country’s overheated economy, which grew more than 11% in the first quarter, led the government to bring in a series of national and local measures to control the real estate market.
These have included higher transaction taxes, more stringent limits on mortgage lending, mandatory land auctions and restrictions on the construction of luxury flats and villas.
And they appear to be working.
Purchases by overseas buyers have also been restricted although not everyone agrees with this move as they tended to buy higher priced properties than local people. Nevertheless, in some areas of real estate the restrictions seem to be having a strong effect.
Source: Financial Times