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Chinese dominate commercial real estate market

CASHED-UP mainland Chinese investors have passed foreigners to become the predominant force in the country's commercial real estate market in the first half of this year, the latest industry report has found.

Between January and June, mainland Chinese investors have accounted for nearly 70 percent of the major property investment deals across the country, with Hong Kong investors taking less than 20 percent and foreigners about 10 percent, international real estate services provider Jones Lang LaSalle said in its recent research.

"We've already seen a marked shift from a foreign-dominated real estate investment market to one where mainland players have assumed pre-eminence,'' said David Hand, head of investments for Jones Lang LaSalle China.

"The Chinese mainland players, namely the insurance companies, state-owned conglomerates and the upcoming real estate investment trusts (REITs), are rising at the same time that foreign investors have been squeezed by the global recession.''

The share of foreign players in the market has been declining, particularly over the past year and a half, not only due to the more stringent approval process for inward investment, but also to the global credit crunch, which has resulted in a dramatic fall in investment activity worldwide, industry analysts said.

In 2005, foreign capital accounted for nearly 60 percent of major property investment in the country but by 2008 it had fallen to about 40 percent, according to Jones Lang LaSalle research.

As the buying power of global players has diminished, Chinese mainland investors, who have generally maintained better balance sheets than their foreign counterparts, have become noticeably more active in the country's real estate investment market.


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