Giant Profits in China

Tourism in China grew in 2007 to become the world’s 4th most visited destination, according to the UN World Tourism Organization (UNWTO). Inbound tourism increased by 6% while Hong Kong showed figures of 7%. Macao was the region’s star performer in 2006, with a growth of 18%, largely thanks to the development of new hotels and casinos and to increased LCC (Limited Liability Companies) access. UNWTO explains that “Growth was still significant, in particular since it followed the extraordinary growth rates of the previous two years.”

As tourism increases, China's property sector continues its escalade to become a dominant emerging market. Since 1998, when the Chinese began to be allowed to buy their own houses, the property sector has been growing at an average rate of 22% per annum. The investment boom of 2003 raised growth to an unprecedented 32.5% per annum. Statistics from the Beijing Land Bureau show that the revenue to investment ratio of high and medium-grade housing has reached as high as 30% to 40% per annum, compared with around 5% in much of Europe and the USA. Consistently high returns on property investment reflect conclusions reached by the likes of Morgan Stanley, who recently stated that up to $2 billion in foreign capital will flow into Shanghai's property market over the next few years.

Sara Romera, Analyst at Propertyshowrooms.com explains: “Although figures are positive, this does not mean China will not be affected by other international economies that have seen a negative growth. China will have to face a decrease in exports demand and, possibly, a lower influx of foreign capital as more developed countries prioritise losses in their own financial systems. However, China has numerous instruments to strike back with, such as the large margin in its fiscal policies. As China is in a transition process, financial authorities continue to have incredible administrative control and currently, this control is being used to cool down the economy although, if needed, it could be used to support it.”

Buying investment property in China may seem like a difficult prospect due to language and cultural differences as well as concerns on complicated bureaucracy. However, China has made huge progress since it joined the UN and embraced a market-oriented economy in the late 1970s. Positive figures, coupled with ongoing growth in all the right areas, have created a unique opportunity for avid property investors seeking optimum rental returns on their purchases.