Is the edge coming off China’s property market?

China’s real estate market is still booming and is netting some investors double-digit growth rates each year on their properties, even though the government has been attempting to stop the property boom.

Most investment has been in residential projects, accounting for nearly 3/4 of total monies spent. Industrial properties are still good investments, however they are growing at a much slower rate.

In an attempt to slow down the huge property boom, the Chinese government have been introducing new property laws, designed to impose restriction on multiple property ownership, especially for foreign investors. Any property that is bought without the objective of being lived in by the legal owner must have official approval before the sale can complete. For any project which will totaly more than $10 million to complete, foreign investors must now also have at least $5 million up front before the project starts.

Despite the new restrictions, China is still a good prospect for property investment although the days of getting a 20% growth on your investment each year are probably gone. Consider that of the ten richest people in China, at least half of them have real estate which helped get them where they are today.

Naturally, the big cities of Shanghai and Beijing are ever popular, but the countryside is also providing a good range of properties with new projects springing up at an speedy rate all over the country. with the costs of buying a new house too much for most of China’s nationals (the average wage is around $1,000 a year), rental income is set to be excellent, which means your investment should pay for itself easily.

The two areas in China hotly tipped for 2007 are Tianjin, the third largest city in China, and Chengdu, a town in the southwest of China and an important ecomonic hub. With the government keen to cool the prices down in Shanghai and Beijing, they may be more open to foreign investors in new cities.

One point to note is quality – if you are not intending to build your own property, it is worth checking the quality of the properties you are buying very carefully, even if they have been built by well-established companies. Many developments are put up in a rush and within five or six years, the paint fades and peels and the development may not look like such a good prospect. A little caution may save a lot of money in the future.

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