[photopress:tianjin_real_estate.jpg,full,alignright]In a report given in Hong Kong on the state of real estate investment in China, Christine Kim, a partner in real-estate practice at international law firm Jones Day, said, ‘Despite factoring in the austerity measures, the return on investment from China properties is still higher than that of overseas.’ (Ed. – The Standard later ran a correction stating that a 20% rate of return in Beijing and Shanghai is difficult to achieve, though such rates are attainable in second- and third-tier cities.)
Private equity funds were seen flowing into Asia — particularly China — during the last quarter, even as the central government was announcing more stringent enforcement of China’s land appreciation tax and other measures.
Christine Kim said, ‘During last year, about $650 billion (RMB5,037 billion) of global real- estate transactions were concluded, with only 15% taking place in Asia.’ This year, she expects transactions in Asia will have room to grow, with China being the focal point.Jones Day believes the property market in China will continue growing since the austerity measures have only been implemented in major cities such as Beijing and Shanghai, leaving second- and third-tier cities unscathed. Christine Kim said, ‘Though the returns will not be as high as Beijing’s 20%, it’s still do-able.’ (Ed – The Standard later ran a correction stating that while return rates of 20% are difficult to get in first-tier cities like Beijing and Shanghai, such rates are attainable in second- and third-tier cities.)
Carson Wen, a partner in mergers and acquisitions at Jones Day, said China’s new property law should be passed this year to enhance private ownership.
Carson Wen said Chinese companies will be active in the second half, with mergers and acquisitions most obvious. He said China is now in the midst of a growth cycle, with consolidation of small state-owned enterprises to create larger entities continuing.
Source: The Standard