Investing in China is much easier than you would expect, and the potential, far from being a needle in the haystack, is absolutely everywhere. New government regulations actually encourage foreign investment and make the process less fraught with complexity than you would imagine. Besides, stringent regulations mean the developers must standardise the transaction contracts in a format that is reasonably straight forward.
There has already been collosal gains in the flag ship cities of Beijing and Shanghai, followed closely by Shenzhen and Guanzhou- to such an extent that the government introduced cooling down measures. These measures have bought gains down to around 10% annually, and generally encourage investors to hold onto to their property for a five year period as response to rampant (and successful) speculation. There was a time when it was possible to by off the plans then flip the asset with a huge profit. Those days are now gone(although it does still happen with reasonable returns but the capital gains tax levied on properties sold within 5 years lessons the appeal), however it is still possible to double or triple your investment over 5 years, while receiving around 8% rental yield annually in the interim.
The savy investor is now looking to so called "tier 2" cities (in essence these are the capital cities of provinces) such as Wuhan, Xi'an, Chongqing and Chengdu which all have strategic advantages and preferential government policy, and which is attracting vast foreign investment in both the commercial and residential spheres. Right now we are seeing 30% increases on real estate over 6 months while the government invests massively in infrastructure to address the imbalance of income disparity. For example in Xi'an, which will have its underground train network completed within 4 years, has recently connected a bullet train to surrounding cities, and which reduces travel time considerably, and in style- a leap of astonishing dimensions when one considers the creaking models it has replaced.
Many are betting that inland cities will soon follow the Eastern hub cycle of significant gains before settling at a much higher level. Prime 110m2+properties can be picked up for around $NZ100k in cities all over inland China, and the risk is not substantial as I see it. One aspect which is particularly attractive is the duel purpose model encouraged by local governments, allowing developments to be used for both residential and commercial use, thereby not limiting potential tenants. The ability to choose great, central locations with managed facilities in cities with 8 million people and more (serious purchasing power) is excellent news for kiwi investors, indeed all investors with some nous. It also offers great chances for new investors looking for a break with the kiwi market becoming inaccessable to some. Taking a punt now on China will likely mean you are nicely positioned for an assault on the Kiwi market in 5 years time- break out of the shackles
In fact I have been in China for 3 and a half years and have already bought two brand new properties in sweet locations which receive a rental yield of around 8% annually, while actual property values are increasing on a daily basis. Rental agreements are usually worked out over a 12 month period. One property in particular was picked up for less than NZ$800/m2, and has bounded forth admirably. We paid a further $6000 to rennovate the place from a concrete shell to spanking new mint condition. Had we pushed the boat out and spent $10,000 we would have had a palatial result. We are awaiting further surges as the subway, swimming pool, Gymnasium and cafe are completed, while the location is to die for. I intend to add a further 3 properties to my portfolio over the next several months in Tier 2 cities, and I seriously advise others to consider it.
The key, as ever is to do your homework and/or have someone on the ground in China who knows what they are doing. In that regard I can highly recommend Sino-NZ Investment Group who specialize in the field.
Yes it is my company as you may have gathered, our mission is simply to help people enjoy these substantial investment opportunities, an endeavour in which we have already had resounding success if feedback from our clients, and the sheer statistics are anything to go by.
We have specialist Chinese realtors at our disposal and only deal with legitimate licensed developers. In addition we take care of translation of all documents through independant and authorised professionals, which are notarised and, as such, bound by Chinese law. You will have peace of mind at every phase of the operation. Investing in China does require a little patience and imagination, however for the brave, sharp increases can be relatively safely anticipated.
There is also the issue of the Renminbi (Chinese currency) which has finally unpegged from the US$, and while still heavily regulated is making slow gains with the potential to lift sharply in the face of US pressure, or more likely when the timing is right for China to increase its value. No one is entirely sure when that will be. In my own assessment I believe it will continue plodding up for some years to come. Add to that the current high of the kiwi dollar and this issue alone could net a substantial windfall.
The Chinese market is not to be feared, though obtaining the services of someone experienced and trustworthy to help you navigate through potential hazards, and avoid becoming a horror story is highly desirable. If you have any questions about China real estate I am happy to help. Drop me an email. Extensive, detailed information also available at our website