Should You Invest?
China has showed openness to progress and development by its
accession to the World Trade Organisation (WTO) in 2001 and, in a
bid to encourage more FDI and non-FDI inflow, China also has dual
taxation agreements with 78 countries, including the UK. Its
rocketing economy is displaying excellent growth prospects that
ensure China is an excellent location for many forms of investment.
Its national and international population is growing , creating an
ongoing demand for property, and with GDP per capita figures on the
up, citizens have more disposable income with which to buy
property. Supply though is not necessarily guaranteed in all
districts so check the state of the market carefully.
- China has the fastest growing economy in the world and is
expected to overtake the US within a decade.
- Implementation of the Property Rights Law should provide more
security on private property rights.
- Demand for property will be consistently higher than supply
over the next few decades and price growth should remain above 10%
for the next 15 years.
- However, China's tax and legal systems are not very transparent
and could cause problems.
- There are also risks associated with China's Communist
government.
Rental Yields
Yields in the five prime cities (according to
globalpropertyguide.com) – Beijing, Shanghai, Guangzhou, Shenzhen
and Chengdu - are generally 5%, although Beijing can
earn slightly more at 5.5% on average.
location
type of
property |
size
(m2) |
average
price
to buy
(US$) |
cost per
m2 to buy
(US$) |
average
price
to rent
(US$) |
cost per
m2 to rent
(US$) |
Yield
(%) |
Beijing -
Apartments |
|
|
|
|
|
|
| |
60 |
114,180 |
1,903 |
539 |
9.0 |
5.67% |
| |
120 |
261,960 |
2,183 |
1,122 |
9.4 |
5.14% |
| |
200 |
465,800 |
2,329 |
2,206 |
11.0 |
5.68% |
Shanghai -
Apartments |
|
|
|
|
|
|
| |
60 |
116,040 |
1,934 |
533 |
9.0 |
5.51% |
| |
120 |
323,640 |
2,697 |
1,176 |
9.8 |
4.36% |
| |
200 |
600,200 |
3,001 |
2,468 |
12.3 |
4.93 |
Guangzhou -
Apartments |
|
|
|
|
|
|
| |
60 |
67,440 |
1,124 |
305 |
5.1 |
5.43% |
| |
120 |
169,200 |
1,410 |
734 |
6.1 |
5.21% |
| |
180 |
345,960 |
1,922 |
1,298 |
7.2 |
4.50% |
Shenzhen -
Apartments |
|
|
|
|
|
|
| |
45 |
66,150 |
1,470 |
314 |
7.0 |
5.70% |
| |
75 |
106,500 |
1,420 |
406 |
5.4 |
4.57% |
| |
105 |
123,165 |
1,173 |
457 |
4.4 |
4.45% |
Shenzhen -
Villas |
|
|
|
|
|
|
| |
120 |
244,920 |
2,041 |
992 |
8.3 |
4.86% |
| |
185 |
573,315 |
3,099 |
1,650 |
8.9 |
3.45% |
| |
255 |
1,367,310 |
5,362 |
2,978 |
11.7 |
2.61% |
| |
325 |
2,017,925 |
6,209 |
3,926 |
12.1 |
2.33% |
| |
450 |
3,460,500 |
7,690 |
6,336 |
14.1 |
2.20% |
Chengdu -
Apartments |
|
|
|
|
|
|
| |
60 |
57,000 |
950 |
203 |
3.4 |
4.28% |
| |
120 |
110,760 |
923 |
395 |
3.3 |
4.28% |
| |
180 |
173,160 |
962 |
682 |
3.8 |
4.73% |
Source: Global
Property Guide
Price History
Due to the rapidly increasing population, especially in the
middle classes, demand for property is very high and so China is
experiencing a boom in the market as supply tries to meet demand.
This is leading to concerns that a bubble market may be emerging
due to overbuilding. The authorities however, are adament that
demand will be continuously high for a long time to come, which
should mean that surplus property will not become an issue, at
least not in the foreseeable future. The restricitve measures
implemented by the government in 2005 to try and curb speculation
led to a considerable fall in property prices, ranging from 5% to
20% drops. As a result, prices still have a fair way to
appreciate.
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