The impact of the US credit crisis on foreign investment in China's property market has yet to play out. But international investors say they aren't considering any change to their long-term investment strategies.
Property analysts said they are watching the unfolding US liquidity drama closely, but they don't expect it will have any significant effect on the flow of foreign funds into China's property market.
"International property funds won't leave China's property market because of the potential return, which continues to exceed that of most other world markets," said Zhang Luan, a property analyst at Haitong Securities. "China's housing needs, driven by its increasing population and urbanization, will further push up property prices, especially in the major cities," said Zhang.
A senior executive at CapitaLand, one of Asia's largest listed property companies based in Singapore, yesterday told China Daily her company does not see any need to adjust investment strategy in China. "We take a long-term view on investment in China and we're looking to steady development by investing over the longer term," she said.
Jones Lang LaSalle, one of the world's leading real estate services and money management firms, said that none of its clients - mainly international investment funds and high net-worth investors - have indicated an intention to withdraw from the Chinese market as a result of tighter liquidity in the global financial markets.
"So far, we haven't seen withdrawal of any foreign property funds from China's market," said Kenny Ho, head of research at Jones Lang LaSalle in Shanghai.
Property analysts said that the relatively less open property market in China has shielded it from full exposure to the credit risks caused by the US subprime issue. Shuai Hu, a property analyst at Haitong Securities, said: "The limitation on foreign capital's entry to China's market has made the country the least affected market compared with others in Europe and Asia."
"The subprime issue by itself is not drastic enough to force foreign property funds to leave China's market," said Zhou Liang, head of research at Lipper China. "These funds usually invest in large projects that cannot be unloaded in the market easily, even if the investors want to get out," he said.
Randall Hall, CEO of Savills Greater China, a major global property service provider, told China Daily that the subprime issue would not become the major concern for foreign investors. "Foreign investors will not leave China's market - they are becoming even more active than before. They are accelerating investment in China's property market."
In the near future, foreign investors will shift focus from Beijing, Shanghai and Guangzhou "to the emerging markets in the second-tier cities of China, including Shenyang, Dalian, Qingdao and Chengdu", said Hall.
(China Daily August 22, 2007)
