Foreign capital rushes into China's real estate market

Foreign capital rushes into China's real estate market
Foreign capital rushes into China's real estate market

08/04/2008, 07:18     [Xinhua China Money]    


BEIJING - More foreign capital has flown to China's real estate and service markets in the first half of this year when land-use and housing prices slid in many Chinese cities.

According to the Bureau of Land Resources of Nanjing, foreign capital started to enter China's upper-grade land market directly for project development since the beginning of the year.

In June, Nanjing, capital of East China's Jiangsu Province, transferred two pieces of land at floor price to Korean SK Group, and Hong Kong Henderson Land Development Co., Ltd., respectively with the transaction valued at 650 million yuan.

A large real estate developer in Nanjing disclosed that foreign capital has gathered steam to grab land at floor price. A British fund is preparing to take over the right to use a plot of land valued at 4.5 billion yuan in downtown city.

Carlyle Group and many other foreign funds follow the same investment idea to step into building market, and Qingdao City in East China's Shandong Province is the first target for its annual growth of GDP at 14% over the past decade, said Kang Mingxun, Vice President of Carlyle Group, Shanghai branch.

Carlyle Group started to focus on core area of Qingdao CBD project in July 2007 with an investment of 1 billion yuan and holding 70% stock. The return for Carlyle's investment will be high, according to an analyst.

Under the recent tight monetary control policies, many foreign venture banks start to wade into credit and loan fields of China's real estate industry with their strong financial abilities.

One example is Bank of East Asia (BEA) (0023.HK). Its businesses in mainland are likely to surpass its parent company in Hong Kong, said Xu Hua, president of BEA, Nanjing branch. BEA has also launched versatile services, such as providing 10-year mortgage for developers.

Cooperation between foreign venture banks and enterprises are popular in the Yangtze River and Pearl River deltas. As some foreign venture banks enjoy advantages of great reputation, global influence and adequate capital, they provide a package of services for enterprises covering planning and settlement by professional staff.

Foreign capital starts to convert its attention to development and design after wave- after- wave acquisition of property management companies.

Six big companies covering design, architecture and investment consultancy were merged into a multi-national group to survive China's real estate market.

Foreign capital investment shifts from management for residential property to that for non-residential property including high-class office buildings, service-oriented flats, deluxe hotels, and high-grade commercial real estate.

It also extends its business scope from real estate development to property management, agent services, rental businesses and financial investment. (CMY)