论文部分内容阅读
Foreign real estate companies develop strategies to explore the potential of China’s real estate market.
“I met the executives of several real estate trust companies. They all believed that the loans for real estate development will be very difficult to get this year,” said an investment manager of a famous Chinese securities company. “I do not think the Chinese real estate market has potential this year.”
In the middle of February 2011, the Chinese Banking Regulation Commission listed real estate market as one of the top six riskiest businesses for commercial banks. In the beginning of this year, the Chinese government issued a policy to prevent one person from buying more than one residential houses. The policy freezes the residential real estate market in large Chinese cities and drives multiple real estate developers into desperation.
The cooled-down residential real estate market
“The central bank has constantly increased the deposit interest rate. It will gradually influence the investment into the residential real estate market. More people who initially wanted to buy houses will wait spending money because of the decreasing house prices. Many real estate developers have therefore focused on the commercial real estate market,” said Meng Jun, partner of Shanghai Yinko Law Office.
“Currently real estate developers are mainly being financed by domestic channels. Very few foreign investors invest their money in China’s residential real estate market,” an expert says. With unprofitable credit conditions and government policies, only a few foreign companies invest in the high-end residential housing market. And most of these foreign companies have entered China’s real estate market when it was more welcoming than it is now. Those foreign companies benefited from the fast development of the residential real estate market almost two decades ago.
Capitaland from Singapore that came to China 17 years ago is one of those foreign companies. By now it has completed 16 high-end residential projects in China. With investments being stuck in these projects, it is hard for Capitaland to quit the used-to-be-very-lucrative real estate market. Furthermore, current situation makes it impossible for Capitaland to make new investment.
Even though few foreign companies invest in China’s residential real estate market, the amount of real estate funds keeps increasing from 2010. According to the data of the Ministry of Commerce, from January to October 2010, the Chinese real estate market saw the actual amount of foreign investment increase by 48.04%, which is much higher than the growth rate in other industries. In the first three quarters of 2010, there established 498 new foreign-funded real estate companies in China. The investment in these companies amounted to 16.6 billion US dollars, which is an increase of 56%.
In April 2010, UBS Global Assets Management Co., Ltd launched its first cooperation-based product in China. The company finished the capital rising for the real estate fund it established with China Goldland Real estate Group. It is known that the capital mainly came from Europe and Middle Asia and will be used in the development of residential houses in first- and second-tier Chinese cities.
UBS Global Assets Management Co., Ltd is one of the few foreign companies that continues to invest in China’s residential real estate market. Other foreign companies prefer to invest in the commercial real estate.
He Yanjun from the leading global real estate advisor DTZ says that the government’s new policy aims to hit the residential real estate market. The commercial real estate market in China will be face a new development opportunity.
Foreign real estate competition in the major Chinese cities
After the financial crisis, many foreign funds re-entered China due to RMB’s appreciation. “Many of them have a long-term commitment on investment in China,” says Bai Yong, partner of Dingfeng Real Estate Fund. “They find great potential in China, in addition to the expectation of rising RMB.”
In 2009, Black Stone established its first RMB fund with the Shanghai Government. The Carlyle Group set up an RMB fund with the capital amounting to 5 billion yuan (USD 761.5 million) in Beijing at the beginning of 2010. Notable was the contract between Capitaland and Shanghai-based Oriental Overseas International Limited (OOIL) in the beginning of 2010. Capitaland spent 2.2 billion US dollars in controlling the stakes of Oriental Overseas Development Limited, a subsidiary company of OOIL.
Beijing, Shanghai, and Shenzhen have become a battlefield for the international real estate giants with abundancy money to invest. Capitaland, which settled in Shanghai and began its development in 1994, has spread itself into the whole China. Now it is running 110 projects of residential housing, commercial buildings, shopping malls, and serviced apartments in 40 cities in China.
“Building of a new Capitaland in China” is the ultimate goal of this Singapore real estate company. “Our acquisition of Oriental Overseas Development Limited in China makes our projects account for 36% of the total number of projects in the world. In the past, the proportion was only 6%,” says Loh Jen Yuh, chief investment officer of Capitaland. China has already replaced Singapore as the largest market of Capitaland. In 2010, Capitaland invested 6 billion yuan (USD 913.2 million) in Shenzhen to build a combo real estate project, which will be completed in 2014.
Another Singapore company Mapletree Group, which is a subsidiary company of Temasek, also has ambitious plans in China. Its CEO Lu Shi said that the company would invest 1 billion US dollars in the commercial real estate projects of China’s major cities many of which are located in Shanghai.
Second- and third-tier cities under scrutiny
The international giants are fighting in the major cities, but they do not forget to extend their presence to the second- and third-tier cities of China. Except of the giants, smaller foreign real estate developers see second- and third-tier cities as a major opportunity to grow in China.
Dingfeng Real Estate Fund is a private fund from Northern Europe. Its investors are mainly institutional investors and wealthy families. The fund led by a Chinese named Bai Yong is specialized in the commercial real estate in the second- and third-tier cities in China. “By now we have invested in 6 projects in the Bohai Economic Rim. We will increase our investment in this area in the future,” says Bai Yong.
Many people share the same investment idea with Bai Yong. “Our investment strategy is dependent on market fluctuations. Currently, we attach great importance to our development in the second- and third-tier cities in China,” says Patrick Boot, general manager of the Investment Department of Pacific Alliance Group. “These cities are going through fast development as the central government is speeding up the urbanization. These cities are the source of great demand for commercial real estate markets.”
Li Li from ISG Capital Management Ltd. also acknowledges the growing importance of second- and third-tier cities. “Many foreign funds believe that the sky-high housing price in major cities leads to a great risk of investing in the sector. However, commercial real estate in less larger cities provides a lot of opportunities for foreign funds.”
In November 2010, China-based Sino Ocean Land and Singapore-based Golden Success spent 650 million US dollars in developing four projects in Dalian, Liaoning. In 2011, KSH Holdings Limited from Singapore formed a plan of building a large commercial project in Gaobeidian, Hebei. The total investment is estimated at 3.1 billion Singaporean dollars. Meanwhile, Charoen Pokphand Group from Thailand built a partnership with Shanghai Greenland Incorporated. Together they will invest in commercial real estate project in Dalian.
Bai Yong said: “After the financial crisis, many foreign and Chinese companies found out that establishing their headquarters in Shanghai and Beijing might be very costly. Therefore, some of them decided to move to the second-tier cities, such as Nanjing, Chengdu, Wuhan and Dalian. These cities have lower land cost and cheaper labor force and thus have great appeal for business. The commercial real estate market in these cities provides companies great potential to earn profit.”
In addition, the increasing consumption in the second- and third-tier cities is a magnet for the retailers. “The young men in these cities would like to spend most of their salaries instead of saving them in the banks. More shopping malls, supermarkets and exclusive stores will be established in these stores. Some foreign luxury stores, such as Dior and Louis Vuitton, have established stores in the cities other than Beijing and Shanghai,” says Bai Yong.
“In the past, coastal cities in China provided better opportunities for economic development. Now the opportunities are being found in the Chinese inland area. The central government has made special plans of developing western, northeastern, middle and southwestern parts of China. Commercial real estate is thus the foundation for the prosperity of these areas in China. Therefore, the central government attaches great importance to boosting those areas’ development, which in turn benefits foreign real estate developers,” adds Bai Yong.
Competition in tourist real estate market
In Bai Yong’s opinion, the development of real estate is closely related to the development of other industries. In previous years, the Chinese demand for residential houses boosted the growth of the residential real estate. Then, the development of the real estate industry drove the development of industrial and technology parks. Now, the booming service and business is pushing the commercial real estate up to a new level.
However, commercial real estate is not the last option in real estate market. Since China is more open to foreigner investors and the income per capita of the Chinese population is increasing, the tourism market is at the dawn of its golden time.
“Maybe it is not the best time to invest in China’s tourist real estate market at this moment. But I am confident that China’s tourist real estate market will provide major investing opportunities in the near future,” says Bai Yong.
Actually, various foreign real estate investors have calculated the growth and begun to invest in Hainan, Changbai Mountains and other areas of interest in China.
In 2006, SoftBank signed a contract with the Chongqing government. The Japanese company planned to invest 1.3 billion yuan (USD 197.9 million) in building hotels and an exhibition center around Changshou Lake in Chongqing.
In 2008, Morgan Stanley from the US spent 5.283 billion yuan (USD 804.1 million) buying 30% shares of a resort in Sanya, Hainan.
A Japanese investment company got an approval from the government of Yangling, Shaanxi in March 2011 and was allowed to build an ecological agricultural garden in Yangling. According to the source, the Japanese hope to introduce their new technology and earn profit from the Chinese demand.
However, foreign investors have to compete with Chinese domestic companies in the tourist real estate market. Domestic companies usually have good relationship with local governments and can get an approval for land exploitation. The best way for a foreign company to get engaged in the Chinese tourist market is through a joint venture with a Chinese domestic company.
“I met the executives of several real estate trust companies. They all believed that the loans for real estate development will be very difficult to get this year,” said an investment manager of a famous Chinese securities company. “I do not think the Chinese real estate market has potential this year.”
In the middle of February 2011, the Chinese Banking Regulation Commission listed real estate market as one of the top six riskiest businesses for commercial banks. In the beginning of this year, the Chinese government issued a policy to prevent one person from buying more than one residential houses. The policy freezes the residential real estate market in large Chinese cities and drives multiple real estate developers into desperation.
The cooled-down residential real estate market
“The central bank has constantly increased the deposit interest rate. It will gradually influence the investment into the residential real estate market. More people who initially wanted to buy houses will wait spending money because of the decreasing house prices. Many real estate developers have therefore focused on the commercial real estate market,” said Meng Jun, partner of Shanghai Yinko Law Office.
“Currently real estate developers are mainly being financed by domestic channels. Very few foreign investors invest their money in China’s residential real estate market,” an expert says. With unprofitable credit conditions and government policies, only a few foreign companies invest in the high-end residential housing market. And most of these foreign companies have entered China’s real estate market when it was more welcoming than it is now. Those foreign companies benefited from the fast development of the residential real estate market almost two decades ago.
Capitaland from Singapore that came to China 17 years ago is one of those foreign companies. By now it has completed 16 high-end residential projects in China. With investments being stuck in these projects, it is hard for Capitaland to quit the used-to-be-very-lucrative real estate market. Furthermore, current situation makes it impossible for Capitaland to make new investment.
Even though few foreign companies invest in China’s residential real estate market, the amount of real estate funds keeps increasing from 2010. According to the data of the Ministry of Commerce, from January to October 2010, the Chinese real estate market saw the actual amount of foreign investment increase by 48.04%, which is much higher than the growth rate in other industries. In the first three quarters of 2010, there established 498 new foreign-funded real estate companies in China. The investment in these companies amounted to 16.6 billion US dollars, which is an increase of 56%.
In April 2010, UBS Global Assets Management Co., Ltd launched its first cooperation-based product in China. The company finished the capital rising for the real estate fund it established with China Goldland Real estate Group. It is known that the capital mainly came from Europe and Middle Asia and will be used in the development of residential houses in first- and second-tier Chinese cities.
UBS Global Assets Management Co., Ltd is one of the few foreign companies that continues to invest in China’s residential real estate market. Other foreign companies prefer to invest in the commercial real estate.
He Yanjun from the leading global real estate advisor DTZ says that the government’s new policy aims to hit the residential real estate market. The commercial real estate market in China will be face a new development opportunity.
Foreign real estate competition in the major Chinese cities
After the financial crisis, many foreign funds re-entered China due to RMB’s appreciation. “Many of them have a long-term commitment on investment in China,” says Bai Yong, partner of Dingfeng Real Estate Fund. “They find great potential in China, in addition to the expectation of rising RMB.”
In 2009, Black Stone established its first RMB fund with the Shanghai Government. The Carlyle Group set up an RMB fund with the capital amounting to 5 billion yuan (USD 761.5 million) in Beijing at the beginning of 2010. Notable was the contract between Capitaland and Shanghai-based Oriental Overseas International Limited (OOIL) in the beginning of 2010. Capitaland spent 2.2 billion US dollars in controlling the stakes of Oriental Overseas Development Limited, a subsidiary company of OOIL.
Beijing, Shanghai, and Shenzhen have become a battlefield for the international real estate giants with abundancy money to invest. Capitaland, which settled in Shanghai and began its development in 1994, has spread itself into the whole China. Now it is running 110 projects of residential housing, commercial buildings, shopping malls, and serviced apartments in 40 cities in China.
“Building of a new Capitaland in China” is the ultimate goal of this Singapore real estate company. “Our acquisition of Oriental Overseas Development Limited in China makes our projects account for 36% of the total number of projects in the world. In the past, the proportion was only 6%,” says Loh Jen Yuh, chief investment officer of Capitaland. China has already replaced Singapore as the largest market of Capitaland. In 2010, Capitaland invested 6 billion yuan (USD 913.2 million) in Shenzhen to build a combo real estate project, which will be completed in 2014.
Another Singapore company Mapletree Group, which is a subsidiary company of Temasek, also has ambitious plans in China. Its CEO Lu Shi said that the company would invest 1 billion US dollars in the commercial real estate projects of China’s major cities many of which are located in Shanghai.
Second- and third-tier cities under scrutiny
The international giants are fighting in the major cities, but they do not forget to extend their presence to the second- and third-tier cities of China. Except of the giants, smaller foreign real estate developers see second- and third-tier cities as a major opportunity to grow in China.
Dingfeng Real Estate Fund is a private fund from Northern Europe. Its investors are mainly institutional investors and wealthy families. The fund led by a Chinese named Bai Yong is specialized in the commercial real estate in the second- and third-tier cities in China. “By now we have invested in 6 projects in the Bohai Economic Rim. We will increase our investment in this area in the future,” says Bai Yong.
Many people share the same investment idea with Bai Yong. “Our investment strategy is dependent on market fluctuations. Currently, we attach great importance to our development in the second- and third-tier cities in China,” says Patrick Boot, general manager of the Investment Department of Pacific Alliance Group. “These cities are going through fast development as the central government is speeding up the urbanization. These cities are the source of great demand for commercial real estate markets.”
Li Li from ISG Capital Management Ltd. also acknowledges the growing importance of second- and third-tier cities. “Many foreign funds believe that the sky-high housing price in major cities leads to a great risk of investing in the sector. However, commercial real estate in less larger cities provides a lot of opportunities for foreign funds.”
In November 2010, China-based Sino Ocean Land and Singapore-based Golden Success spent 650 million US dollars in developing four projects in Dalian, Liaoning. In 2011, KSH Holdings Limited from Singapore formed a plan of building a large commercial project in Gaobeidian, Hebei. The total investment is estimated at 3.1 billion Singaporean dollars. Meanwhile, Charoen Pokphand Group from Thailand built a partnership with Shanghai Greenland Incorporated. Together they will invest in commercial real estate project in Dalian.
Bai Yong said: “After the financial crisis, many foreign and Chinese companies found out that establishing their headquarters in Shanghai and Beijing might be very costly. Therefore, some of them decided to move to the second-tier cities, such as Nanjing, Chengdu, Wuhan and Dalian. These cities have lower land cost and cheaper labor force and thus have great appeal for business. The commercial real estate market in these cities provides companies great potential to earn profit.”
In addition, the increasing consumption in the second- and third-tier cities is a magnet for the retailers. “The young men in these cities would like to spend most of their salaries instead of saving them in the banks. More shopping malls, supermarkets and exclusive stores will be established in these stores. Some foreign luxury stores, such as Dior and Louis Vuitton, have established stores in the cities other than Beijing and Shanghai,” says Bai Yong.
“In the past, coastal cities in China provided better opportunities for economic development. Now the opportunities are being found in the Chinese inland area. The central government has made special plans of developing western, northeastern, middle and southwestern parts of China. Commercial real estate is thus the foundation for the prosperity of these areas in China. Therefore, the central government attaches great importance to boosting those areas’ development, which in turn benefits foreign real estate developers,” adds Bai Yong.
Competition in tourist real estate market
In Bai Yong’s opinion, the development of real estate is closely related to the development of other industries. In previous years, the Chinese demand for residential houses boosted the growth of the residential real estate. Then, the development of the real estate industry drove the development of industrial and technology parks. Now, the booming service and business is pushing the commercial real estate up to a new level.
However, commercial real estate is not the last option in real estate market. Since China is more open to foreigner investors and the income per capita of the Chinese population is increasing, the tourism market is at the dawn of its golden time.
“Maybe it is not the best time to invest in China’s tourist real estate market at this moment. But I am confident that China’s tourist real estate market will provide major investing opportunities in the near future,” says Bai Yong.
Actually, various foreign real estate investors have calculated the growth and begun to invest in Hainan, Changbai Mountains and other areas of interest in China.
In 2006, SoftBank signed a contract with the Chongqing government. The Japanese company planned to invest 1.3 billion yuan (USD 197.9 million) in building hotels and an exhibition center around Changshou Lake in Chongqing.
In 2008, Morgan Stanley from the US spent 5.283 billion yuan (USD 804.1 million) buying 30% shares of a resort in Sanya, Hainan.
A Japanese investment company got an approval from the government of Yangling, Shaanxi in March 2011 and was allowed to build an ecological agricultural garden in Yangling. According to the source, the Japanese hope to introduce their new technology and earn profit from the Chinese demand.
However, foreign investors have to compete with Chinese domestic companies in the tourist real estate market. Domestic companies usually have good relationship with local governments and can get an approval for land exploitation. The best way for a foreign company to get engaged in the Chinese tourist market is through a joint venture with a Chinese domestic company.