WUHAN, Chongqing, Chengdu — many foreigners may never have heard these names before, but they are Chinese cities where the stage may now be set for the next big Asian property frenzy. As the Chinese Government is trying to cool red-hot property markets in Beijing, Shanghai and other large cities, attention is increasingly moving to the nation's second-tier ones.
"Asking prices are creeping up quickly. It is important to get in to the (second-tier) market now," said Stephen Chan, national director at LaSalle Investment. Such cities have high internal rates of return (IRR), a measure that, roughly speaking, tells investors what they can expect to make from an investment on an annual basis.
"Development projects in the country's second-tier cities produced IRR of over 20 percent, exceeding their first-tier counterparts," said Richard van den Berg, ING China manager.
Developers and investors alike are eyeing in particular the south and west of the country, said David Faulkner, Colliers International's regional director for China.
"There have been increased levels of investment in many key cities in the Pearl River Delta region as well as more centrally located transportation hubs such as Wuhan, Xian, Chongqing and Chengdu," he said.
The Central Government is aiding this transfer of real estate investment from east to west by a number of macro controls, one official said.
"The creation of special economic zones, high-tech development zones and economic technological zones under programs such as the western regional development strategy are of key importance to encourage foreign funds to invest in second-tier cities," said Zhai Baohui from the Ministry of Construction."Second-tier cities have greater potential for investment," Zhai said. "They are experiencing increased transparency and consolidation in the market." But this emerging property boom is not just a product of relatively recent government policies. Long-term demographic trends are playing a large role.
As urban populations around the country continue to expand, investors see great opportunities for growth in such real estate.
"If you are there at the right time with the right product, the market is yours," said Stanley Ching, Hong Kong-based head of real estate at CITIC Capital Markets Holdings Ltd.
Source:未知