CBRE to Begin Investing in Chinese Property Market
15 November 2011
CBRE Global Investors, who manage $94.8 billion of property assets, are looking at making their first investment in the Chinese housing market for four years, as they are anticipating the government will start easing restrictions on buying property very soon.
Apparently they are currently in talks with Chinese partners and local governments and are looking at buying a site for residential development next year. China increased mortgage rates on some home loans and increased deposit requirements in around 40 different cities to help make housing more affordable and to control inflation.
However now it looks likely that the European debt crisis could affect Chinese exports, and the government may be forced to ease tightening measures. The property restrictions have already helped to curb inflation, and it's expected that the government could begin easing credit restrictions by the middle of next year onwards.
Just two weeks ago the Chinese premier Wen Jiabao stated the government would maintain the property restrictions, but some experts think Chinese property prices could fall by as much as 30% in 2012, and it's highly likely that China would reverse its restrictive measures should home prices fall more than 20%.
Property prices in China declined for the second month in a row in October, and local government’s income from land sales has also dropped due to the credit restrictions. These local governments are now offering more plots in prime locations at lower prices than at the peak of the market in order to help finance infrastructure construction. It's likely that CBRE will choose to invest in smaller cities and will focus on mid income housing as opposed to cities such as Shanghai and Beijing where price increases have made housing less affordable.