Houston Community News >> China Sees High Overseas Real Estate Investment

3/5/2007-- Morgan Stanley has purchased 24,000 sq metres of land in downtown Shanghai for a high-rise office building project worth 1.3 billion yuan ($166 million). This is yet another move by the US investment firm to extend its reach in the real estate sector on the Chinese mainland, after it acquired a high-end housing project in Shanghai's Xuhui district for 530 million yuan in January.

As small- and medium-sized real estate developers sell land for lack of money, overseas companies speed up acquiring stakes in them and their projects and will have a greater say in the mainland's high-end real estate market, said the Shanghai Securities News.

A total of $8.23 billion of overseas capital was invested in the mainland's real estate sector in 2006, up 51.9 percent year on year, according to figures from the National Bureau of Statistics.

Among the investors, the Hong Kong-listed Kowloon Development Co Ltd announced Jan 19 that it would raise Hong Kong $5.29 billion to invest in the mainland's real estate projects.

On Jan 31, chairman of Hang Lung Properties Ltd Ronnie Chichung Chan said his company planned to invest Hong Kong $10 billion in 2007 to increase its land reserves by 800,000 square meters on the mainland.

At the beginning of February, Cheung Kong (Holdings) Ltd and Hutchison Whampoa Ltd acquired 177,300 sq metres of land in Shanghai's Putuo district for Hong Kong $2.2 billion.

Meanwhile, a number of domestic real estate companies - including the Shanghai-based Shimao Group, the Hangzhou-based Greentown Real Estate Group and the Beijing-based Capital Group - have received international private equity investments, said the report.

On Jan 30, US private equity firm Warburg Pincus set its foot in the mainland's real estate sector by purchasing a 25 percent stake in Shanghai Zhongkai Real Estate Development and Management Co for $30 million.

Again Feb 17, the Netherlands-based ING Group acquired a 49 percent stake in a subsidiary of the Shenzhen-based real estate giant Gemdale Group.

A recent report from Deutsche Bank's real estate investment advisor RREEF shows the gross profit rate is 20 percent to 30 percent for Chinese housing projects and is likely to surpass that for American ones in the future.

(Contributed by Xinhua)