China » Market Report

The overall real estate market in China is dynamic and grows fast in terms of capital flow and development speed in spite of the problems. The resale housing market is almost nonexistent in China a few years ago. In 1999, the government completed its basic policy for secondary housing market and encouraged urban residents who owned their homes to sell smaller, older, and low-quality houses in exchange for bigger, newer, and high-quality ones. Some cities, e.g. Shanghai and Ma Ansan of Anhui province started to experiment the secondary market earlier than other cities in China. 

Since 1996, there have been 67,333 residential properties being put for sales on the market in Shanghai, accounting for about 5% of the total sold properties there in the same period.

In 2000 alone, about 7.5 million square meters (80.73 million square feet) existing houses were sold in Shanghai. There are over 5,000 foreign funded real estate companies, including China-foreign joint ventures (JVs) or cooperative enterprises, and over 1,000 wholly foreign-owned companies currently operating in China. Hong Kong is the top investor, accounting for over 75% of total foreign investment, followed by the United States and Taiwan.

During the middle and late 1990's, real estate markets in big cities were overheated. Price of prime land in Beijing has fallen from the highs experienced in the boom development period of the early 1990s. In 1999, the vacancy rate for Grade A buildings was 30% in Beijing and 38% in Shanghai. Some experts estimated that the vacant space might take two to three years to be absorbed if the recent trends in demand continue. The market now seems to be picking up the momentum when many residents are upgrading into bigger housing.

To regulate the market and protect consumer's interest, the government released the revised Model Commercial/Commodity Housing Purchase/Sell Contract in September 2000. The model contract serves as a standard contract and allows potential real property buyers and sellers to understand what are involved in a real estate transaction. The government hopes it will eventually help consumers reduce the risk in home purchase.

Despite difficult times China’s property market is facing in 2008, International property brokers predict that after the successful Olympics the future holds better prospects in the long term for China property market, especially in shanghai and Beijing. For the immediate future Chinese property prices will almost certainly fall early in 2009, due to a fall in demand for new homes in many regions. The annual growth in real estate investment estimated around 24 percent in 2008, will drop drastically to 5 percent in 2009.