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Hot properties snapped up

By Jin Jing (China Daily)
Updated: 2008-07-10 10:32

Though there has not been any significant loosening of restrictions on foreign investment in the mainland's real estate sector, foreign investors have been displaying a sustained appetite for prime properties in Shanghai.

According to statistics from CB Richard Ellis, the total acquisitions made by foreign institutional investors amounted to $1.4 billion in the first half of this year, up 84 percent from the same period of 2007.

"Though China's economic growth slowed down a bit, the relatively low credit risk of mainland real estate market continues to boost investor confidence," said Charles Zhang, associate director of investment services and special projects at Colliers International.

Among the completed deals were the sale of the Center by Hutchison Harbor Ring to Asia Pacific Land, Shama Luxe from Gateway Capital to Mirae Asset, and a 90 percent stake of Changshou Commercial Plaza sold by VXL Capital to Blackstone.

More and more European and American developers are becoming active in the Shanghai market by acquiring all or part of companies that own land.

"Foreign investors turned to engage in project development to gain premium profit when investment yield is so narrow, and local developers also need funding support against macro controls and tightening policy," said Zhang.

Around 88 percent of foreign investors who completed deals in the first half in Shanghai came from North America.

About 43 percent of foreign investments were in the office market and 22 percent were in the residential market, according to Jones Lang LaSalle.

"There is growing long-term interest from Middle Eastern investors," said Greg Hyland, national director of corporate capital market at Jones Lang LaSalle.