Strong Tourist Industry In China To Help Property Market

China has begun a huge drive towards urbanization. It is understood that they are relocating about 20 million people each year from country border to the cities. Very much the same is happening in the whole of East Asia as this half of the continent undergoes a strong urbanization drive. Asian governments are doing everything in their power to woo foreign buyers and investors. However supply has not kept pace with demand which has boosted rents and capital values. Even though some foreign investors are buying property directly or with the help of Real Estate Investment Trusts (REITs), they are relying heavily on wealthy Asians who have interest in property investment.

The Chinese real estate market has detracted though – of that there can be no doubt. The signs of a slide in the market are everywhere. May be the slump is due to the rise in government regulation, a reduction in the rate of foreign money flowing into the Chinese real estate market or the fact that top-draw real estate developers in the country have had to lay off staff and shut down offices. The reality is that any analyst worth their salt and quite a few that are not would quite comfortably be able to perceive the real estate slump that has affected China in recent months.

Actually, though, virtually every analyst also anticipated this to occur. The combination of regulatory measures by the Chinese government that were enforced to do exactly this and the significant rule of economic theory that the cost of a commodity (in this case, property) can not increase ad infinitum would have indicated the future to almost anyone. However, mixed signals are the flavor of the day for the Chinese economy, because while property sector is going through a downturn, the tourism sector is flourishing.

The income for the Chinese government from tourism in 2008 are expected to reach CHY 1.2 trillion, which would represent a notable surge from the income of just under CHY 1.1 trillion that the country was able to achieve last year. This suggests that foreign money is still entering the Chinese economy, albeit through a sector that is linked to property rather than actually being property.

What this ultimately implies, though, is that mixed messages are being conveyed to property investors who are looking to invest in the Chinese real estate market. While the market is certainly dull at the moment, the question that requires to be answered is whether it will come back and whether it will perform so soon enough to make property investment in the country profitable.

One of the things that can assist in a property rebound is a lucrative tourism industry. That develops additional demand for property, and this is part of the reason so many investors are keenly following the tourism numbers in China. The case clearly seems that strong tourist industry as a property rebound in China.

CB Richard Ellis Greater Asia is the region’s leading real estate and international property consultancy. We leverage the industry’s most powerful knowledge base to meet the commercial real estate needs of its clients worldwide.

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