BIG ISSUE China
attracted 5,200 across three days. The International Property Expo in Beijing? 53,000, in one day! Exhibitors really cannot complain about numbers.
CHINA’S ECONOMIC STUTTER Although China’s GDP is still offi cially 7.5% this year, that is down from the double digit growth of recent years and other measures, such as the HSBC Purchase Managers’ Index, show manufacturing activity shrinking. The worsening exchange rate, wage and land price rises have combined to make Chinese goods more expensive abroad and cut profi ts (while making overseas property cheaper – more of this later). Meanwhile, the Chinese government is making a serious attempt to curb rampant house price infl ation at home, with limits on home purchases, higher down payments, higher mortgage rates, and limits on credit for developers. Supply of land for building in
diff erent regions is now being allocated more carefully in an attempt to balance the supply and demand for homes and, in March of this year, the Chinese central government told local authorities to enforce the 20% capital gains tax on profi ts for resales.
It is too early to gauge the eff ects of this, but prices in fi rst tier cities
53,000, in one day! Exhibitors cannot complain
(such as Beijing and Shanghai) have not slowed down yet. Beijing prices still rose by 1.59% in May, as attempts to cut the hikes were thwarted by the huge land prices in Beijing and constant demand of people to live there.
Elsewhere in the country, latest fi gures show that prices in one
hundred Chinese cities rose 7.4% from a year earlier, but with a slightly slower monthly increase. Could there be a negative knock-
on eff ect on overseas property? The western sellers that we spoke to said, unequivocably, no. Quite the opposite, according to Benjamin Locke: “When I fi rst started selling in China in 2008, property in Shanghai and Beijing was growing in the double digits and the only real reason for Chinese wanting to invest off shore was really for their children or perhaps diversifi cation. But the market has changed drastically in that time and each year has been much better than the year before. Much of this has to do with the rise of economic worry in China, the controls implemented by the Government in China, and the fear of a bubble in the Tier 1 housing markets.”
Our experts were equally dismissive of the argument that Chinese buyers have been put off by the limit on Chinese spending more than US$50,000 abroad. “Some have business interests in the USA already, so they have cash profi ts. Others use relations to transfer the extra cash required,” says Garrett Kenny from Feltrim Developments in Florida. Eli McGeever points out that Chinese investors have options for getting round the law, but at exhibitions “It’s best to have a strong China team who are able to deal with the situation eff ectively.” And as Jacky Li at Sky Property points out, you could use it as an opportunity: “Agents are now off ering properties under US$50,000.”
Information exchange centre, Guangdong 08
UNDERSTANDING THE MARKET The Chinese have traditionally bought overseas property for three principal reasons: emigration, investment and education; often all three. The opportunity to get residency rights outside China comes high on the shopping list, which is why Portugal’s (and now Spain’s) ‘golden visas’ are causing such excitement. Eli McGeever at ACN Worldwide (
www.acnworldwide.com) says: “Immigration is also a very big driver at the moment, as is using
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