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The annual review of property markets in the Asia Pacific region, covering sectors including residential, office, hotel, retail and investment, said real estate investment with a unit value of US$10 million or more rose 22 percent to 322 cases in the mainland last year, with total value rising 33 percent to HK$157.747 billion (US$20.2 billion). "In addition to the growing number of transactions, the money poured into each investment project also gets bigger, increasing by nine percent from an average of million HK dollars in 2005 to 490 million HK dollars in 2006. This reflects a higher level of investment activity in the country's real estate market," said Alva To, director of consulting and research with DTZ. Of the 322 investment deals on the mainland, 273, or 85 percent, were land purchases for real estate development. The remaining 49 deals involved the acquisition of entire buildings. Compared with 2005, the number of land transactions increased by 19 percent, while that of entire buildings witnessed a more remarkable growth of 44 percent, a sign that the latter is getting a larger share of the investment pie. The total investment value of en-bloc building purchases last year was HK$33.021 billion. While domestic funds are major land buyers, accounting for 80 percent of site transactions, foreign funds preferred buying whole buildings, executing 82 percent of those deals. Foreign investment in en-bloc buildings rose 38 percent from 2005, with total value surging 67 percent to 29.5 billion HK dollars. Foreign funds include all money contributed by overseas-listed (including "With both transaction numbers and the investment amount surging in tandem, we can no doubt conclude that investment funds are keener to invest in this rapidly-expanding economy - especially in search of ready-built properties that warrant attractive returns - partly riding on housing-price hikes and the potential appreciation of the Chinese currency," said To. DTZ added that rapid economic growth and acceleration in urbanization, combined with an increasing influx of multinational corporations, bodes well for the development of the real estate market. In particular, as However, investment interest in major cities elsewhere also heightened, with the number of transactions conducted outside of Shenzhen and Spectacular price rises in major cities boosted by strong investment demand have prompted foreign funds to look for potential opportunities in southern While most investment money was spent on completed office and retail projects in 2005, the combined share fell from 68 percent to 49 percent last year in terms of total number of transactions. Meanwhile, serviced apartments, residential blocks and hotels emerged as favored alternatives. Their share of total investment almost doubled from 20.6 percent in 2005 to 40.9 percent in 2006. "We are seeing a much more balanced performance across various property sectors in 2006. Despite the fact that office and retail retain their dominance, we believe demand for investment opportunities in residential, serviced apartment and hotel sectors will increase," To said. This is due to faster urbanization, growing affluence and an increasing inflow of expatriates into As for building sites, both mainland and overseas funds are showing increasing interest in land, with the number of site transactions involving mainland funds rising 15 percent to 218, and that of foreign funds jumping more significantly by 37.5 percent to 55. Despite austerity measures to control investment in real estate, financially sound overseas investors are still keen to invest, said DTZ. Sites allocated for residential development are the most popular, accounting for 37.7 percent of total number of transactions, increasing from (Shanghai Daily February 13, 2007)
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