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China: really different? OPP EDITOR


34 | CHINA WORDS |Mina Mu


and B2C events and exhibitions. With expanding business in China, real estate shows in China have also attracted many international exhibitors – and there are more shows to come. It is interesting to compare the shows that have taken place in Shanghai and Beijing and the one that is going to happen in Chengdu, Sichuan Province. The 15th Shanghai Spring Real Estate


I


Market Exhibition and the 7th Shanghai Overseas Property & Investment Immigration Show ran from 15th-18th March. It was just two weeks after the government’s “New Five Main Policies” were announced – though the detailed policies have not come out yet. One of those policies was to curb


property speculation and property price infl ation.


Because of this, the domestic


exhibitors wanted to seize the opportunity sell their stock and boost the number of potential buyers. However, compared with the already high-price properties in the local market, which were increasing slowly in value, there seemed to be more choice for investors in the international real estate market. The very busy international property stands supported this view. A similar situation occurred at the 2013


International Property Expo Beijing (for more information about the Beijing Expo, please see the report on page 39). For both exhibitions, the number of


international exhibitors and countries represented created new records. The difference between the shows in


Beijing and Shanghai, which may only be a coincidence, is that Beijing Expo essentially promoted domestic holiday and retirement properties after the new polices came out. It wisely avoided the currently sensitive topic of investment property. On the second day of the Beijing show, the Holiday Property Development Summit was published. What is more interesting is that


the coming show in Chengdu, Sichun Province, in the middle of June will also focus on domestic holiday property and international property. Loads of developers attending the show will be from the traditional and popular holiday


n the past last month, the property industry around the world was extremely busy with all kinds of B2B


www.opp-connect.com |MAY 2013


China, too, has property shows. It’s just that they are bigger – and busier – than anywhere else on earth. What does a novice need to know before dipping their toe in the water and exhibiting? What does an old hand think when she sees the changes that have taken place in her country in the last few years?


properties on the basis of price. Some property in Detroit, US is an extreme example. Many are sold at a very attractive price. Some were even sold at $1! However, expensive maintenance and a rotten property may not give much investment value. For the sake of future business, agents have the responsibility to remind the investor about the potential risk of what they are buying. The Chinese appreciate this. Finally, I will also look at changes


affecting Chinese and overseas developers.


Due to the specifi c way overseas A diff erent mind-set?| Many Chinese buyers have mixed objectives


cities in China and surrounding countries. This is an inexorable trend that is


emerging because of demand caused by the change in people’s lifestyle. The continuing policies restricting on the purchase of domestic investment property and on the mortgages have accelerated this trend. It is also very interesting to see the reasons why people are making real estate investments. It was very obvious when talking to individuals at the show. The Chinese buyers are different from most non-Chinese buyers in that they tend to have a mixed purpose. For example, many countries have adopted policies that mean investors could obtain the right to emigrate to or live in that country when they purchase a property with a certain minimum value. Many investors will chose this kind of investment because it kills two birds with one stone: they may rent it out for the moment and consider moving in later when they are ready, since they will already have either the Permanent Residence visa or the right to obtain one. This situation is very common for people thinking of buying in Portugal, Spain and Cyprus – which, of course, all


have the additional attraction of offering the buyer residence in Europe (though not all with the same rights). The natural and unpolluted environments and the desire to explore the outside world have also encouraged this kind of investment. Some want to combine investment


with holiday/residential use. For example, for investments in UK and Australia, it has been a trend that the property is bought particularly for use of their offspring when they study abroad. The property chosen is big enough to allow them to rent part of it out, which produces enough to for the child’s living expenses during their study. This is a pretty wise investment, as long as you have enough capital to invest in it.


Property investment in France and the


US (especially in Florida and Las Vegas) is mainly for pure investment, since the properties in these regions experienced a huge loss in value, which now is thought to be bouncing back.


No matter what the purpose of the investment, real estate agents should be carefully when introducing products to investors. It is not a bright idea for the agent to do nothing but promote the


development is carried out, the developers usually go and seek capital to do the development when they have the project. One way is to seek to cooperate with other developers. Chinese developers would like to expand and test the water. However, they are not as familiar with the market as the local developers. In this way, there could be a very effective cooperation between the Chinese and local developers. The facts also prove this. It was announced that the Chinese property development tycoon VANKE


“The number of international exhibitors and countries represented created new records”


Group is going to launch an hotel and appartment project in San Fransisco with the famous TISHMAN SPEYER of the US. According to Wang Shi, the CEO of VANKE Development, there are around 200 apartments sold already even though building has not yet started. At the same time, the international


companies are keeping up their pace of investment in China. The Hilton Group has just announced that it will open 115 brand new hotels in the fi rst and second tier cities, holiday cities and economically developing districts in the next three to fi ve years. The large scale of their expanding business in China is based on comprehensive market research. As we can see, with the whole Chinese market growing, this is a two- way communication. Chinese companies are trying hard to go global, and international companies are trying to invest in China.


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