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Funds Wary of Risk in China Real Estate

[时间:2010/9/7 22:59:11  查看次数:3444  作者:上海房产律师  来源:转载]

 SHANGHAI -- Executives from some of the world's biggest property investment funds said China's real-estate market remains risky and unattractive for foreign investors despite recent signs of improving conditions.
The foreign executives, attending a major real-estate conference last week in Shanghai, said that financing for property deals in China remains nearly impossible to obtain, and that building prices need to fall further to justify new activity.
Overall, real estate in the country remains too risky, illiquid and poorly developed to expect significant overseas investment at a time when bargains are emerging in more transparent markets elsewhere, the executives said.
"International investors are taking their money home," said Richard Price, regional chief executive officer of ING Real Estate Investment Management.
He said well-known complications of doing property deals in China "make people pause" about committing money now.
Falling property prices and a collapse in transactions were a major cause of the slowdown in China's economic growth last year. Foreign investors have been a relatively tiny force in the property market, but they tend to have a disproportionate influence on the market and on policymaking.
China's government has clamped down on speculation in residential apartment prices in recent years partly by pinching foreign investors with new hurdles.
But with foreign money drying up more recently, Beijing has relaxed some of those measures -- and local officials pledged at the conference that foreign investors would have easy access to their cities and highlighted tentative signs of stability in prices.
Apartment prices have indeed been stabilizing, and property deals have been picking up. In the first two months of this year, 51 million square meters of mass residential property sold, according to the National Bureau of Statistics. That was basically flat with the year-earlier level, while the value was more than 11% higher. On the stock market so far this year, a sub-index of property shares is up 67%, more than double the 30% gain in the broader Shanghai Composite Index. Bank lending has also exploded in recent months.
But skepticism was abundant at the two-day Real Estate Investment World China conference, which drew about 280 attendees this year, down from last year's record 400.
"Maybe we're seeing the bottom of the market but is it the real bottom or is the government supporting it?" said Song Wei, a senior vice president of Chicago-based Equity International. "I haven't seen a lot of bargains yet."
In a straw poll, the majority of attendees predicted "measurable positive turnaround" for China's property market in 2010, not this year.
Bombed-out prices in more developed markets like the U.S. highlight reasons not to invest in China, said Stephane Tremblay, a vice president of CDP Real Estate.
Mr. Tremblay, whose Montreal firm manages $50 billion in property assets, said that when money was easy to obtain investors could discount the chances for political turmoil or other big disasters -- higher in China than in more developed markets like the U.S. In the current environment those considerations are stumbling blocks, he said.
Several attendees said prices haven't fallen enough to reflect market oversupply. Beijing, Shanghai and Guangzhou each have at least 10 million square feet, or 930,000 square meters, of office construction underway, according to a report this month from Colliers International. Shanghai's vacancy rate shot to 10.2% by year-end 2008 from 4.7% at midyear, it said.
The best deals may be in "distressed" assets in China, which is the way analysts describe the sale last week of a 34-floor Shanghai building called POS Plaza for 1.76 billion yuan, or $258 million. The seller was a South Korean investor and the buyer a government-controlled company, Shanghai Lujiazui Finance & Trade Zone Development Co.
田杰 律师
中国石油大学英语学士,华东政法大学法律硕士,曾在Clifford Chance上海代表处任高级翻译,在中伦上海分所和中银上海分所任专业房地产律师。现为北京大成(上海)律师事务所执业律师,主营房地产交易、投融资业务[详细]

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