Shanghai has seen record overseas investment in the property
market, despite central and local government efforts to curb
foreign capital inflow into the sector.
A report from global real estate consultancy DTZ showed overseas
institutional investors injected more than 18 billion yuan into
Shanghai's real estate market in 2006, covering a total floor space
of 1 million square meters. The two figures were both three times
those of 2005.
The DTZ study revealed that overseas institutional investors did
not waste any time snapping up the city's residential, office and
commercial space last year, except in July and August when the
government policies were heightened.
DTZ investment department director Yip Kin Shing told Shanghai
Securities News last week that overseas investors continued to be
major players in Shanghai's property market in 2006.
Yip said overseas insti-tutional investors would penetrate
further into China's real estate market in 2007. Their investment
is expected to exceed that of last year, focusing mainly on office
buildings, serviced apartments, commercial space and logistics
warehousing.
While primarily targeting first-tier cities, more overseas
capital is expected to enter second-tier cities by teaming up with
local developers, according to Yip.
Faced with steep property prices that have sparked widespread
concern, the government issued rules in the middle of last year to
restrict overseas investment in the country's real estate
market.
At present, overseas investment pours into the city's property
market mainly through three channels mutual fund investment in
property, direct purchases of office and commercial space, and
individual purchases of apartments.
Large institutional investors such as Morgan Stanley, Goldman
Sachs, Citigroup and the Carlyle Group have often made headlines
with big purchases in Shanghai.
The Shanghai Land Administration recently launched the Shanghai
Land Investigation and Planning Institution to provide technical
support to ensure the city's limited land resources are put to
better use.
(China Daily January 10, 2007)