Foreign investment increases in real estate market
Falling prices, discount offers and dwindling transactions, it seems that the real estate market is less attractive to individual buyers in China. On the contrary such a circumstance provides a good opportunity for the foreign investors to enter the market. It is said that some international groups have raised substantial capital for China property funds and are now developing the money, while others are moving capital from less vibrant markets in North America and Europe. Many international funds are also looking for mature properties in key cities, like Beijing and Shanghai.
Besides the local developer’s financing challenges also create opportunities for international investors. Due to the government policies aimed at limiting speculation in the residential property market, tighter monetary policy and the plummeting stock market this year, some less competitive real estate company get merged or acquired by the larger and wealthier developers. By June this year, the value of merger and acquisition deals involving mainland property has reached $15.29 billion which is 142 percent higher than that in the same period last year. And it’s harder for developers to obtain bank loans.
To raise money a lot of property firms offer initial public offerings. But as a result of the stock market plunge and global credit crunch, property security become out of favor. There are some small developers who would like to sell their projects and some listed real estate firms that acquired a lot of land parcel last year but find it hard to develop them now due to the credit crunch.
But the international investors should be cautious in conducting mergers and acquisitions, as the market is experiencing a shift from investment-orientated buying to self-use buying. And somebody thinks that compared with the company’s land reserve bought five years ago, the current price for mergers and acquisitions is not attractive enough.
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