Ming Wei Real Estate Investments

Fri, 08/29/2008 - 21:22

Dear Subscriber,

Introduction

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The state of the Zhuhai Real Estate Market

Property prices in China generally have softened considerably in the last few months. Even China's large internal economy is not immune from the global credit crunch. Property prices in central locations in Zhuhai have stagnated over the last three or four months, and transaction volumes have plummeted. A number of estate agencies have gone out of business, and others have reduced the size of their branch network. Rental demand has weakened too, although there are still pockets of strong demand in Xiawan, especially near the New Bar Street alongside the Qianshan river.

The rail link to Guangzhou is now well underway, and should becompleted by next year. This will, for the first time, permit people tolive in Zhuhai, with its clean air, good schools and attractive seasideambience while working in Guangzhou, with its higher concentration ofmulti-national companies and executive jobs. This should have a majorimpact on demand for upmarket accommodation in the city and should helpto offset the general slowing down of the economy.

The Hong Kong and Macau property market is surging ahead, fuelled bycheap money provided by Ben Bernanke. Whereas RMB interest rates arelikely to rise to combat inflation the HK equivalent is tied to thedollar. This makes for an interesting property market in the twomarkets which have such a big influence on the Zhuhai market.

Progress on allowing foreigners to borrow to finance property purchase

I have continued to investigate ways to allow foreigners to obtain bank financing for purchases. I have made a small breakthrough, but this will be economic only for the larger investor. It requires that the investor set up a WFOE in China, so it is only for the more active and committed investor. If you are interested I can send you details. This should be available for any sort of real estate investment - commercial or residential.

Investing pension savings in China real estate

It is possible for those of you with SIPPs or SSASes to invest in China. I have been speaking to a financial advisor who knows of a way to comply with the rules on investment in real estate but still invest in overseas property. This involves setting up a investment vehicle, with around ten investors through which the investment can be made. Please call me to find out more about this opportunity.

Converting currency problems (in principle) solved

I have now solved, in principle, the problem of remitting foreign currency into China for the purpose of purchasing real estate. I am now in contact with some English-speaking lawyers who have a good knowledge of real estate law in the mainland. The whole process of property purchase in Zhuhai should now be straightforward. I have spoken to a number of experts on remitting investment profits out of China and they all tell me that there are really no problems doing this, as long as the audit trail for the original investment is available.

Auctions coming up in Zhuhai

There are a lot of auctions for properties coming up in Jida, along Jiuzhou Dadao, which is a major thoroughfare. These can be somewhat difficult for foreigners because of fairly onerous rules about registering to bid and depositing funds up front. However some bargains can be had, especially in a slow market, such as the one that obtains in Zhuhai now.

Thinking of buying to refurbish?

I have a number of contacts in the building trade, who can refurbish tired apartments in Zhuhai. Some of these can be rather expensive, but it is undoubtedly the case that a very well decorated 'western style' apartment commands a premium rent and - as long as it is in a central location - can be rented to one of the increasing numbers of foreigners who are coming to work in Zhuhai. There are often good returns to be made by buying properties in a good location but in a poor condition. Many buyers need to rent or occupy quickly because of cash flow constraints, and so are not interested in such properties. We can take the risk out of getting the redecoration done on time and on budget.

Guide and interpreter facilities now available in Zhuhai

I am now able to arrange an English-speaking guide, with car, to showinvestors around Zhuhai. I have an office in Gong Bei, fully equippedwith internet and English-speaking staff, who can arrange accommodationand generally look after you on your visit to Zhuhai to inspectproperty. This is in partnership with a tour company that operates in Zhuhai, Hong Kong and Macau. They would be delighted to arrange a trip to local tourist attractions!

Best Regards,

Steve Hemingway
Ming Wei Property

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