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Curbs on 'hot money' see sharp drop in property deals
By Cao Qian |
January 9, 2009, Friday
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Print Edition
Print Edition
EN-BLOCK property acquisitions by overseas investors dropped by more than 25 percent in Shanghai last year as a result of central government curbs on so-called "hot money" as well as an overall lack of liquidity globally and an investment shift to more developed markets, a world leading real estate service provider said yesterday.
"Overseas real estate acquisitions totaled 16.3 billion yuan (US$2.38 billion) last year in the city, down 26 percent and 12 percent, respectively, from 2007 and 2006," said Greg Hyland, head of investment at Jones Lang LaSalle's Shanghai. "The main driver was restrictions placed by the central government on the so-called 'hot money.'" Hot money is defined as capital that is transferred from one financial center to another seeking the best opportunity for short-term gain.
Besides, a worldwide liquidity crisis has also made it harder for investors to raise enough capital and many global investors are beginning to revisit opportunities in developed markets which have seen their capital values decline more rapidly, and now perhaps present high return possibilities in a perceived lower risk environment, the firm said.
A noteworthy trend is that more investors are now switching their focus back to high-quality properties in the first tier cities because of new investment openings arising from a sharp drop in capital values amid a worsening economic scenario, after switching to second tier and third tier cities in China over the past few years.
Jones Lang LaSalle predicted that while there were no major property transactions involving overseas investors in the fourth quarter of last year in Shanghai, this year may see a different picture. Many investors think this year might be a good year to buy as corrections have already taken place in major property sectors, Hyland said.
But a major real estate broker cautioned that it may still take some time for a momentum to pick up in the local property market. "Some property owners haven't found buyers even after they've agreed to offer a discount of as big as 30 to 40 percent from their peak prices," the broker told Shanghai Daily yesterday.
Industry experts also predicted earlier that domestic players as well as private investors from Hong Kong, Taiwan and Singapore may be more active in the city's property market.
"Overseas real estate acquisitions totaled 16.3 billion yuan (US$2.38 billion) last year in the city, down 26 percent and 12 percent, respectively, from 2007 and 2006," said Greg Hyland, head of investment at Jones Lang LaSalle's Shanghai. "The main driver was restrictions placed by the central government on the so-called 'hot money.'" Hot money is defined as capital that is transferred from one financial center to another seeking the best opportunity for short-term gain.
Besides, a worldwide liquidity crisis has also made it harder for investors to raise enough capital and many global investors are beginning to revisit opportunities in developed markets which have seen their capital values decline more rapidly, and now perhaps present high return possibilities in a perceived lower risk environment, the firm said.
A noteworthy trend is that more investors are now switching their focus back to high-quality properties in the first tier cities because of new investment openings arising from a sharp drop in capital values amid a worsening economic scenario, after switching to second tier and third tier cities in China over the past few years.
Jones Lang LaSalle predicted that while there were no major property transactions involving overseas investors in the fourth quarter of last year in Shanghai, this year may see a different picture. Many investors think this year might be a good year to buy as corrections have already taken place in major property sectors, Hyland said.
But a major real estate broker cautioned that it may still take some time for a momentum to pick up in the local property market. "Some property owners haven't found buyers even after they've agreed to offer a discount of as big as 30 to 40 percent from their peak prices," the broker told Shanghai Daily yesterday.
Industry experts also predicted earlier that domestic players as well as private investors from Hong Kong, Taiwan and Singapore may be more active in the city's property market.
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