In recent times, the Chinese economy has truly roared, clocking up an average growth rate of 9.5 per cent for more than a decade. And in terms of real estate, it is Shanghai, co-host of the 2008 Olympics, which is making the headlines. Capital growth in the city increased from 15 per cent in 2002, to 25.5 per cent in 2003, and stabilised at 19 per cent in 2004.

So, with returns like this, why hasn't China made more of a splash in the international property market? The answer lies in the peculiarities of Chinese law. Chris Brooke, Beijing-based representative for CB Richard Ellis, explains the
significance of property laws introduced in 2006 as follows: "Any investment in commercial property now needs to be undertaken via an on-shore registered company. In the residential sector, foreign buyers seeking to acquire residential units must have lived in China for at least one year, and that the unit being purchased must be for self use. If not, acquisitions must be conducted via an on-shore corporate entity."

In other words, there are easier markets to invest in, although Richard Nunn of Property Frontiers believes that laws being introduced in October 2007 will make things a little easier: "Amendments/improvements to China's Property Law provide more protection to property buyers and owners, making China a more attractive property market in which to invest," he says.

So, where should those brave enough to enter the dragon's den of the Chinese property market look to make their investment? "Shanghai remains a good choice," says Nunn. "A number of secondary cities, such as Chongqing, Chengdu, Qingdao, Dalian, Wuhan, are also recommended to pioneer property investors. In addition, there are a number of resort areas worth considering such as Hainan Island and Kunming in Yunnan Province." According to Brooke "Grade-A offices in a prime location in a major city are probably your best bet. Safe residential investments can also be found in the major cities of Shanghai and Beijing." Be warned, though: These safe bets don't come cheap. 

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Related article:
Property in China: New laws on way

Article published July 2007