GOING INTO CHINA PROPERTY MARKET

Abstract

China investors used to worry about getting in too early. Perturbed by horror stories of starry-eyed plans that went expensively wrong, many companies were content to sit on the sidelines. Their philosophy was: Let others do the risky pioneering and be prepared to move in later when the stakes are lower. Suddenly that doctrine is found to be wanting. In the year 1992, with her economic reforms in its highest gear ever, China emerged as the world's most attractive investment opportunity. Foreign investment figures showed that in the first 6 months of 1992, actual investment totalled US$3.36 billion which is a 130% increase over the same period in 1991. It all began when the Chinese senior leader, Deng Xiaoping decided to inaugurate the Open-door policy in 1978. Among the various reformed policies, Special Economic Zones (SEZs) were mooted to provide enhanced investment environment with preferential tax treatments etc. Since then, foreign investment focussed on SEZs as well as China's capital, Beijing. However, nothing is perfect, despite the euphoria surrounding China properties, the pace of development has triggered a great deal of scepticism. This is not surprising since China has only begun to come to term with the notion of a real estate market in the last few years. Although the changes so far has been phenomenal, the system still leaves a lot to be desired. For example, clear property related laws and regulations are non-existent. Thus in her search for foreign investment, there is also need for professional consultancy and expertise to upgrade the real estate market. What is encouraging, however, is that the Chinese government has recognised their existing problems and is committed to develop the tertiary industries which include the real estate, financial services, retail and servicing industries. As long as economic reforms and the open-door policy prevail, it should continue to have positive repercussions on the future development of a ‘real' property market in China.