Dreamtown is a 4,000-unit, "resort-style" for-sale multifamily development in Shenzhen which consists of townhomes, mid-rise walkups and high-rises targeting the middle-market. The most expensive units, in the townhomes, sell for about $380 per square meter. The first phase sold out in less than a week—that represented 725 units. There is a huge demand for products of quality.
As this project case study illustrates, the sheer scale of both housing developments—and the appetite for housing, at least for now—in China may well be on an altogether different plane from what developers may be accustomed to in the U.S.
China is creating demand for about 15 million additional housing units per year in its urban areas, about eight times the demand of 1.5 million to 2 million units annually in the U.S. Private developers in China are currently building only about 3 million units of housing annually to meet this demand. This is a big country, with a huge housing shortage.
China represents one vast multi-housing market. And it is now possible for foreigners to play in the real estate market in the Middle Kingdom, keeping in mind that it may be one tough market to crack with the steep learning curve required, the laws applying to foreigners, and the various difficulties of operating in the country.
Today, it is a "very realistic" proposition for American companies to develop real estate in China, asserted attorney Mitchell Silk, partner and head of the China Group at the New York office of the international legal practice of Allen & Overy. Allen & Overy's China Group represents foreign companies directly investing in China.
The vast majority of private residential development in China is for-sale, in accordance with the Chinese cultural preference, although some rentals are also developed in the form of apartments or villas and "service apartments." Accordingly, the residential products the U.S. developer or investor would participate in are almost exclusively for-sale. There are two main forms of multi-housing types built by Chinese developers: "apartments" (high rises), and "villas" (mid-rises or townhomes).
Residential prices have generally been increasing since 2000. For example, average for-sale prices in Shanghai, the hottest housing market, have almost doubled between 2001 and 2005, from RMB$3,659 to RMB$6,698 per square meter. The average sales prices (per square meter) of luxury apartments at the end of the second quarter amounted to US$1,939 in Beijing, US$3,221 in Shanghai and US$1,403 in Guangzhou. Villas sell for even more, registering average sales prices (per square meter), at the end of the second quarter, for example, of US$2,100 in Beijing and US$2,861 in Guangzhou. As far as rentals, at the end of the second quarter, luxury villas were renting for US$26.79 per square meter in Beijing.
Of course, China is regarded still as a risky proposition. However, although it belongs to the category of an emerging market, it is of note that China has a country-risk ranking that is better than that of Poland, Mexico, Russia, India and Brazil, according to rankings by Institutional Investor. The cost per square foot of developing townhomes in China, even including the additional cost of importing materials or training workers, is less than in the U.S.
And if American developers or investors can crack the market, the returns to be expected from developing or investing in real estate in China can be about 12.0 (core investments) to 19.5 percent (opportunistic investment) commensurate with the returns of an emerging market.
These returns compare to 7.5 to 15 percent in developed countries.
Source:佚名