Buying Property in the China
China and specifically Shanghai is one of Property Frontiers' most exciting regions from a property investment perspective. Although Beijing is the capital and seat of government, Shanghai is the commercial hub of the country and is more open and westernised due to its long heritage of international trade and European influence meaning that you are more likely to see good returns in capital appreciation and rental income.
Hadromi & Partners assists clients in acquiring property in China as well as other Asian countries through its network offices.
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Since this time property prices have risen by nearly 20% per annum as foreigners flock to snap up luxury properties in the China. However while property seems to be one of the most intelligent investments that can be made, it is also perhaps the toughest. The decision to buy property should be backed by extensive homework. A buyer should consider the quality of the local area, distance of local amenities; state of public transport and most importantly the neighbourhood rental prices.
It is essential to study in detail the property market of the particular emirate that the investment might be made in. Take for example the City of Shanghai. Shanghai has some of the most sought after property in the world but a 4 bedroom house in the affluent area of Pudong will cost around GBP 84,000. This is in contrast to the 862,000 one might expect to pay for a similarly sized property in the St John’s wood area of London. Despite the discrepancies in house prices mortgage rates are very similar. The fixed rate of both the Halifax bank and Amlak Finance is around 6.50% meaning that the cost of borrowing money to buy houses in China would be the same as in Britain.
With last years incredible growth of the property market, the Chinese government implemented a variety of measures to dampen the market in the short term such as increase capital gains tax. Bearing in mind that private property ownership has only existed in China for a handful of years, the Chinese government are being very cautious about controlling all growth, and with prices in central Shanghai still a third of other global financial centres, these may be unwelcome in the short-term but are actually very sensible moves. Please be aware that the housing market in general in China is still so young and new that all factors, such as the CGT, will most likely change as they adopt more european property models.
For example, also at the moment the mortgage market is not advanced such as in the UK. You will only be able to acquire 60% finance at the best of times over a shorter repayment term, and there are no interest-only mortgages at present. Again, this should change as Banks in China are given more freedom. At the moment however, to invest in China, you do need to consider to have at least 40% of the purchase price available as a deposit.