Whoever years visited China regularly during recent years, could not overlook the rapid developments Chinese cities are currently undergoing. Chinese cities are trying to cope with the enormous changes in urban development and are trying to make them up in just a few years instead of decades.
Construction cranes as far as one can see. As soon as one office building or residential complex gets finished, another one is begun right afterwards. In both cities, Shanghai and Beijing, there are even a few odd modern and futuristic looking properties, which obviously never go to be finished, because their investors run out of money.
Whole districts are changing within a few years. Whoever visited Beijing 10 years ago, and wants to look at the city again now in order to revive memories, will certainly not recognize some parts of the city any longer.
The Chinese government has feared that a real-estate-bubble is developing for some time now and has therefore introduced appropriate countermeasures. During recent years Chinese properties have become more and more popular with foreign investors, thanks to high yields above average, which the market is still promising. Continuing deregulations for companies and loosening of restrictions for foreign companies make China a country that seems to guarantee long enduring growth in the property market.
However, the Chinese government has feared for some time now that the capital of foreign investors has a growing impact on increasing prices primarily in cities as Shenzhen, Beijing and Shanghai. As a result it would eventually make it more and more difficult for the growing middle class to acquire properties for themselves.
In July 2006, some regulations were introduced that were to impose restrictions on foreign individuals and companies. By imposing these restrictions, it was aimed for making life more difficult to foreign speculators who only were interested in gaining short-time profits.
However, these regulations were sceptically received, for the reason that foreign investors would in any way only occupy a small portion of the whole market. In addition, persons and companies acting from Hong Kong and Macau remained left out in the regulations, what in fact made it possible for European investors to join the market through loopholes via Off-Shore companies. Foreigners usually purchase in China preferably luxury estates. Foreign investors do invest their money mainly in luxury estate, office buildings and shopping centres.