Things to Considerations Before Investing in Chinese Real Estate
by Arina Smith Investing 22 February 2018
The economic growth of China has been fueling its real estate market. This trend has attracted a lot of real estate investment in China from both domestic and foreign players. However, it is not wise to jump into this market without doing some background surveys. You need to understand the facts that revolve around acquiring property in China.
Non-Residents Can’t Buy Real Estate in China :
This point is critical for anyone who desires to invest in properties overseas. You should not invest in Chinese real estate unless you are willing to move there. The regulations of the Chinese government states that individual foreign buyers have to demonstrate that they have been working in the region for a minimum of one year. You also need to prove that you are buying the property for self-use. As a potential foreign investor, you should not underestimate the speed at which Chinese cities are growing. However, you must have all the information at your fingertips before you make a purchase decision.
The Government is in Ownership of all the Land :
The Chinese economy has some capitalist elements that can make you forget that you are dealing with a communist nation. There is joint property ownership in China, and people only obtain the right to use the land but not own it. The government owns all the land, and you need to be aware of this. The government leases land for residential use to real estate owners for seventy years. After this, it is uncertain whether you will retain the ownership or it will go back to the government.
Big Cities Tend to be Safer for Foreign Investments :
The government of China ranks all cities into ‘tiers’ while using their gross domestic product and population as a yardstick. Some of the tier one cities include Shenzen, Guangzhou, Shanghai, and Beijing just to name a few. Tier two cities include Nanjing, Suzhou, Hangzhou, Chongqing, and Chengdu among others. These cities have with high levels of security, large populations of expatriates, more regulations by the government, well-developed infrastructure, high density of amenities such as hotels, food and beverage and retail, international airlines and high-quality development that have professional property management. These attributes make the cities to be ideal for foreign real estate investment.
The preferred neighborhoods within cities undergo rapid changes. Chinese cities have high growth potential. People who are looking for investment opportunities in China should begin by familiarizing themselves with the master planning blueprint of the desired town. Find out the most credible ambitious development goals and align with them accordingly.
Once you find the most appropriate opportunity to buy an investment property in China, you need to employ strategies that can help you mitigate the risk of fluctuation in currencies as you make the down payment or submitting the monthly installments for the mortgage. For instance, you can use an online foreign exchange service to set up a bid if you want to own a property abroad. The online foreign exchange service provider will help you to execute the transaction. It will assist the foreign buyer to capture the desired exchange rate for the down payment he is making on the Chinese real estate.
In summary, like any other foreign investment, China has several potential rewards and risks. Therefore, investors should take a lot of cation and have realistic expectations while investing in this region. Currently, the residential market of China is in its early stages of development making is ideal for medium and long-term investment. However, don’t use the previous returns to estimate what you are going to get.
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