Shanghai
Home to the powerful Shanghai Stock Exchange, Shanghai rubs
proverbial shoulders with New York, Tokyo and London and is one of
the world's most important trade and finance centres. Its GDP
growth exceeded 1.2 trillion yuan in 2007, the sixteenth
consecutive year of double-digit growth, with expectations that it
will reach 2 trillion yuan by 2012.
Having won its bid to host the World Expo in 2010, the city is
enjoying US$2.3 billion dedicated to new urban infrastructure. The
resulting influx of people has caused demand for property to far
outstrip supply and stands the market in very good stead.
Considering the city's current status, the price of property
remains attractive – you can purchase here at a fraction of the
cost of other world financial centres, and at half or even a third
of the prices in Hong Kong or Taipei. This means that the potential
for capital growth is substantial, and prices are likely to rise
sturdily over coming years.
The real estate market in Shanghai is very healthy due to
constant demand for luxury residential units. Transaction rates are
high and construction is increasing to match demand. Fuelled by
surges in the residential market and a rising consumer price index,
average rental prices have increased to US$22.5 per square metre
per month. The luxury residential market is a stable one with an
optimistic future as demand seems set to increase further.
Confidence in the market is compounded by the many new construction
projects planned for the city.
Beijing
Beijing is the capital, main political and cultural centre of
China and enjoyed a thriving GDP growth rate of 12.6% in 2007. Due
to host the 2008 Olympics, the city will without doubt become a
property investment hotspot, augmented by the US$41 billion that
has been budgeted for the city's transformation and development of
infrastructure.
As the centre of China's tourism and therefore seeing a high
level of transient population, serviced apartments and hotels in
the city represent a good buy and are set to benefit greatly from
the increased levels of Olympic tourism. In addition, excellent
infrastructure should ensure that the city maintains it position as
a key investment destination long after the Olympics have
finished.
In the luxury residential property sector, prices are averaging
US$3,000 per square metre, whilst rental prices have risen to
US$22.8 per square metre per month. Although rental yields
for luxury properties (predicted to be around 5.5% for 2008) are
better than many of the world's other metropolises, the vacancy
rate is alarmingly high, currently standing at 25.43%.
Chongqing
The yield compression in first tier cities is diverting some
institutional investors' attention to second tier cities among
which Chongqing is an obvious hotspot.
Chongqing is located in Central China at the confluence of the
Yangzte and Jiangling Rivers and, following Chinese government
policies aimed to further develop western China, Chonngqing has
become somewhat of a "Gateway to the West". Chinese central
government has committed US$2 billion annually to improve
Chongqing's infrastructure, support that is predicted to continue
for at least a decade. According to the Chongqing Municipal
Government, the growth rate of its economy ranked third across the
country, reaching 15.6% in 2007. On a year-on-year basis this is
the fastest growth since 1997.
Central government's "go west" plan is providing an enormous
boost to the city and the Three Gorges Dam project (impacting
tourism and the relocation of residents) and increasing FDI will
result in increased demand for commercial space and
accommodation.
The Chongqing real estate market is showing steady growth, with
the number of residential housing transactions up 34.65% in May
from the previous month. The market seems unaffected by the recent
earthquake in the neighbouring Sichuan province. The Chongqing
Municipality have also earmarked 10 billion yuan (US$13 billion)
for the demolition and renovation of all old and dangerous
buildings in its nine urban districts, planned to occur over the
next five years. This bodes well for the up and coming city,
providing a huge boost to the housing market as well as to the
overall potential of this city.
As a secondary city, Chongqing is beginning to be recognised as
an upcoming market with enormous potential for high rental yields
and capital appreciation.
Macau
Dubbed the Las Vegas of the Far East, Macau is one of world's
most famous off-shore banking centres and tax havens. Only
70km southwest of Hong Kong, property prices in this small
territory (only 23km²) are about a third of Hong Kong's.
The revenue from its gaming industry was greater than Las Vegas
in 2007 (about US$10.3 billion), up 46% on the previous year's
total. After the completion of Sands Macau, the world's biggest
casino in 2004, Wynn Macau in 2006, and MGM and Venetian in 2007,
15 new casinos will become operational by the end of 2009 along
with a number of new hotels and should draw higher levels of
tourists. Macau already receives 27 million tourists annually so
its future is very positive.
GDP growth has been averaging 10% per year since 2001, with 2007
seeing a growth rate of 27.3%. It is even rumoured that Macau's GDP
may soon outstrip Hong Kong's. Meanwhile, unemployment stands at a
low 2.9%.
With its robust economic performance, continual wealth
enhancement, booming gaming and gaming related tourism industries,
Macau's property market is attracting more and more sophisticated
property investors and property prices have already increased by
over 100% between 2002 and 2005. The supply of new dwellings
is very limited and the property vacancy rate is low, making Macau
a prime market with great potential. Rental yields for residential
properties are about 4 to 6% but are expected to grow quickly as
large numbers of foreign expatriates and highly educated staff move
to Macau to take advantage of the burgeoning gaming and tourism
industries.
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