China Real Estate

The investors want to take advantage of the Chinese boom of the real estate. In the second part of I'interview, Arjuna Mahendran, responsible Research Asia Pacific of the Credit Switzerland, examines the influence currently exercised by Olympics 2008 of Peking on the real estate markets in China and expose some consequences of the Communist past of the country.

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Olivia Schiffmann:  15 years ago, the elevated buildings were rare in Shanghai. Since, one saw to construct 554 of it. Other cities also know a boom of the construction. What would you tell to potential investors fearing that an overheating in this domain drives to the downfall of the market? Arjuna Mahendran:  The Asian and Chinese regulators, that kept the lessons of the Asian crisis of 1997, appeared capable to anticipate the apparition of bubbles in the real estate. And the stock investors are henceforth a lot more conscious of the importance of the just value concerning assessment of the titles and the real estate projects. An integrated mechanism permitting to contain the excessive valorizations exists therefore. The main reason of the crisis of 1997 was the flight of funds out of Asia, due to the fact that the western financial institutions asked for the repayment of loans granted to real estate societies and public works deep in dept. The regulators look henceforth after the mastery of the indebtedness.

Once upon a time there was, and doesn't have so long, to be " rich" wanted to tell to invest in a house of country in France, a villa in Spain or in the Caribbean. Since the beginning of the years 90 the tendency turned toward Italy, Portugal, Greece or Florida. But the real estate tendencies move very quickly, France and Spain are well on still the countries preferred of the purchasers and French and international investors, however if you are in search of the rare pearl, of the real estate investment certainly risky but that can return big in a near future, our investor's team toughens selected for you 9 countries that deserving your attention very strongly:  Bulgaria, Mantle Verde, Brazil, Morocco, The Dominican republic, the Egypt, China (Shanghai), Ukraine and India."

Ukraine, more particularly the region of Odessa and the sea black, has a very big potential. its GDP 2004 on the increase of 12% either 3% more than China. Ukraine is naturally rich and take advantage of one tourist zone history for all the Europe of the East. After the Orange revolution as well as the Eurovision in Kiev this year, the country will finally take advantage of these natural advantages. Sale Real estate urkaine

The maroc. Already valued by the French investors, Morocco that attracts today l'. it of international purchasers should benefit a bullish spiral of its prices. The Maroccain economy is strong, the serene political climate as well as a steady currency. More and more infrastructure strengthens our point of view. The prices are always weak in comparison with Spain:  A villa has 750K. in Spain will cost you 270K merely. to the exit of Tangiers. Sale real estate maroc

Poland:  In member of the European union from 2006, Poland will receive around 13 Billions of dollars for its investments in infrastructure, of which a part will benefit has the Gdansk, formerly the city of Danzig. its old city is fantastic and is constructed in the same way as Dubrovnik, around a port and close to its very beautiful beaches. Of the lines of transportation Low Cost opens up more and more in the country returning the more and more accessible Poland.

China and Shanghai. The opening of line " low cost" through Europe returned financially the more and more easy and accessible international investments. It is certain that no line low cost is foreseen in Shanghai (even though it is not impossible), however, Shanghai is the city knowing the biggest growth in the country also having one of the strongest growth at the world. The works of construction started in Shanghai as well as Peking, for the preparations of Olympics of 2008. China is certainly a bet, but a bet on certainly the next big world power.

The investment in the real estates knew a continuous increase. The total was of 7.01 billions of yuans (+25.8%) and the growth rate lowered 1.9 point.

The investment in the cities knew a moderate increase. The investments in the primary sector increased 20.3% instead of the reduction of 19.6% of last year;  in the secondary sector, of 38.3%, but the rhythm of growth lowered 8 points in relation to 2003;  and in the tertiary sector, of 21.6%, a decrease of 0.5 point. Among the projects of investment superior to 5 millions yuans in the cities, the investment in the industry of steel increased 32.3% with a decrease of the rhythm of growth of 63.9 points in relation to 2003;  in the cement, of 43.3% (-70.1 points); in the car, of 53.5% (-24.3 points); in textile, of 30.3% (-56.4%); and the investment in aluminum lost 1,8% against an increase of 86,6% in 2003.

The investment in the real estate exploitation continued to increase. It reached in 2004 1.32 billion yuan, either an increase of 28.1% in relation to 2003. The sale of buildings merchants returned 1.04 billion of yuans (+30.0%), of which 93.3% of the turnover came of the sale to the individuals (+30.4%).

The investment in the major works took place favorably. One achieved investments of 111.4 billions of yuans in the project of the Three Throats, permitting the entry in service of 11 groups électrogènes and the increase of the capacity of facilities of 7.7 millions of kW;  19.8 billions of yuans in the construction of the railroad Qinghai-Tibet, permitting the pose of 743 km of rails,;  and 2.1 billions of yuans in the works of routing of the water of the south northwards, permitting the starting of five projects of construction on the itineraries of the East and the center. Thanks to the investment of the central government, the west pipeline is has been put in service at the end of 2004;  one transformed 150 000 km of farming roads and interdistrict, resolute the problem of the drinking water for 50.2 millions inhabitants of farming regions;  achieved 163 projects bound to the emergency system medical in case of accident and finished for the essential the works of 1 296 projects bound to the national network of prevention and control of the illnesses.

Shanghai destination, where a friend of childhood welcomes this stympathique from Toulouse. Thanks to the network of the expatriates, it rushes like realtor. Good pick!

A radical life change. Why is to leave the sun of the southwest for the coast from China? Answer:  to seize its luck. Diploma of the ferry in pocket and level of BTS sale force, Jean-Charles feels that a radical life change would be beneficial to him. That falls well, his friend of childhood, in Shanghai since numerous years, makes him calls of the foot. It is decided, cape on China.
The youngster From Toulouse spends her first three months discovering the city. With a more particular attention for Maoming Lu (the Rue Maoming), to the cSur of the former French concession. Friday and Saturday evening, the sidewalks of Maoming don't have anything to envy to those of London to the exit of the pubs. It is the street of the expatriates, where the bars push as mushrooms, where one leaves and where one makes some meetings. And to spend one weekend to Maoming Lu can sometimes prove to be more efficient than a networking party (to read the portrait of Boon).

Of a small job to the first job. A friend complicates proposes him to play the mediators for the account of a real estate agency. Shanghai knows how to make you very pragmatic and Jean Charles doesn't make exception. His network as well as this first semi proposition of employment allows him to position itself on the market of the real estate. He proposes his services as specialized agent in the foreign clientele. The French - whose population has more that doubled in 5 years (of 1500 to 3500 people) -, are going to constitute his "fund of investment." And that works! First experience of one month in a society, very quickly Jean-Charles learns to sell itself and decide to canvass bigger enterprises, while negotiating his conditions of enrollment. After 4 interviews, and although not speaking Chinese, Charlie - his new nickname -, pick up his first true contract with the Shanghai society Terrific City.

An evolution to the Chinese. Nothing seems to shake his enthusiasm. "It is a little as to the United States, you progress according to what you achieve and no according to your diplomas." The problem of the language? With a clientele nearly exclusively French and many bilingual colleagues anglais/chinois, he doesn't land indeed. Of as much that, according to him, the hierarchical ties are a lot less sensitive than elsewhere:  "I address my superior as to friends". After 4 years of good and faithful services, Charlie is not ready to leave Shanghai Terrific City - he has just refused even a proposition of an American real estate agency -, nor to come back in France. "I have a level and a quality of life distinctly superior to the one that I will be able to have had in France, even to equal station ".

Fall of the prices of 30% since last summer and multiplication of the bankruptcies of real estate agencies:  lately again one of the most dynamic real estate markets to the world, Shanghai presents today the signs of a brutal slowing. And that, after years of overheating.

With the bursting of the bubble, many small owners meet strangled also by credits become too heavy. Numerous were estimated themselves yet lucky to have made part, after hours, or even of days, of tail, of the candidates to the purchase having gotten the ticket allowing them to make an offer for an apartment on plan.

The real estate in the Chinese metropolises was the subject of frantic investments these last years, especially in Shanghai, financial heart whose landscape has been transformed completely night and day by the cranes in action and the abundant manpower come from the countries in quest of use. In this flaming market, the prices of the real estate doubled in three years, until the first months of 2005.
However, before the risks of overheating, the authorities of the metropolis to the 17 millions of inhabitants took some measures last spring to slow down overinvestment and speculation:  taxes on the increment, obligation of repayment of loans before the resale, interdiction to sell before the completion of works, raising of the rates of the credit and the initial contribution.
Since June, the prices began to fall and those that had just reached for the first time the property met with debts superior to the value of their investment, explain Song Ha?, a specialist lawyer of the real estate of the Zhongxia cabinet.
So the square meter has it lowered of more than 33% in the district of Xianfeng, to about forty minutes of the center, where an apartment of 100 square meters sold itself for 500.000 yuans (62.000 dollars) has one year.
" Most investors borrowed at least 350.000 yuans from the bank, but seen the state of the market and the localization of the district, these houses are not worth more even that", explain Song Ha?, whose cabinet had about hundred business of this type to treat since June.
" Then, the new owner frequently, returns its good in the bank and waits to see that that this one can give of it to him. And well often, it is again in debt", he adds.
For the analysts, the growth of this type of indebtedness is troubling. Already in 2005, the doubtful real estate credits had represented 1.55 billion of yuans, against 558 millions yuans in 2004, according to the official statistics. " C.st a systemic risk for the banks of Shanghai", warns an economist of UBS Jonathan Anderson. According to the agency Savills China, at the end 2005 the middle prices had declined 31,9% in relation to one year earlier.
The impact is even bigger on the complex luxurious of Pudong, this district emerged of nothing from the end of the years 80, become a jungle of ultramodern buildings. " Shanghai Green City for example, on the Street of Pudong South, the prices that reached 18.000 yuans the square meter fell to 10.000 yuans" underline Yu Ying, a person responsible of the most important agency of China, Yiju.
Under the fire of the critiques for this brutal backlash, the municipal authorities retort that it was necessary to bring back a certain stability in the sector.