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China
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Real Estate
in China
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Residential
Real Estate Market In China
see also.... China's
Urban Housing Reform
China
has been a densely-populated country from ancient times. Always
it depended for survival on labor-intensive rice cultivation.
Cooperation was crucial for China 's existence, especially for the
making and maintenance of a very complicated system of dykes and
irrigation canals.
Chinese
people travel less owing to many political and geographic reasons. They
remain tied to their village - a system of living repeated for numerous
generations. The sequence of planting and harvesting remained constant,
leaving very little scope for experimentation - a failed trial would
mean starvation. An agricultural hierarchical society gradually
emerged. China 's real estate market is to be viewed against this
historical perspective.
China has the most lively
and exciting
property market in the world. The real estate property market in China
is dynamic and it grows fast in terms of capital liquidity and
development pace in spite of many adversities.
The
residential
real estate market in China is extremely competitive also. There are a
number of local and regional property developers. An increasing number
of large scale national residential property developers have also
appeared on these markets. Competition criteria include geographical
location of properties, the types of products offered, price, designing
and quality.
There are a number of agencies
involved in
residential property development, investment, and management. Most of
them offer independent property analysis. There are also a number of
highly reputed residential property forums specially meant for property
owners, developers, asset managers, investors and fund managers,
financiers and real estate specialists who are looking for property
investment opportunities in China.
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It is extremely
important to
accurately understand the Chinese residential property market, how to
locate local partners, and identify quality projects before you buy a
property.
Also find out indirect property vehicles
such as
private equity funds and REITS. You have to assess and access property
investment opportunities against risks. Also clearly understand the
changing regulations influencing residential property transactions. It
is advisable to identify the most appropriate financing system for
buying and selling residential real estates.
Compared
with the
United States and other developed residential property markets, China
's real estate market is less experienced and unripe. The resale
property industry was almost absent in China a few years ago.
Presently,
there are around 25,000 property brokerage firms utilizing over 200,000
agents. In addition, there are also an estimated 20,000 property
management companies appointing over 2 million people. A lot of
brokerage firms, however, do not possess proper business licenses and
certification.
For example, it was lately reported
that, out of
the 4,000 real estate firms presently operating in Beijing, only around
700 have proper business licenses and certificates. In another recent
case study conducted in Shanghai, it was revealed that 982 real estate
brokerage agencies were operating without a license and registration
with the appropriate and competent government agency. A number of cases
of real estate malpractices have been reported in recent years. These
malpractices include misleading advertisement, low quality houses sold
at a premium price, and delayed transitions.
During
the late
1990 's , property markets in big cities of China were overheated.
Price of prime land in Beijing has fallen from the heights attained in
the boom development phase of the early 1990s. The vacancy rate for
buildings was 38% in Shanghai and 30% in Beijing in 1999.
Residential
real estate experts estimated that it might take two to three years for
the vacant spaces to be absorbed if the recent trends continue. The
market is now picking up momentum as many residents are upgrading into
bigger residences.
China 's local residential real
estate
companies experience many weaknesses. Firstly, they lack experience
owing to short history. They have only limited competing capacity due
to smaller sizes. They suffer from insufficient capital resources and
negative marketing means. Lastly, they have lower management skills -
many of them are not service-oriented.
With a view
to regulate
the property market and protect consumer 's rights, the government
released a revised model commercial contract in September 2000. It
serves as a standard contract code and allows property buyers and
sellers to realize what are the risks involved in a property
transaction. The government expects that the new contract will
eventually help property buyers reduce the risk in their home purchase.
Wantanee
Khamkongkaew
Wantanee Khamkongkaew is an
independent author evaluating and commenting on leading International
Property Consultants in Asia and Greater China.
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