Ming Wei Real Estate Investments

Investing in a market like China involves exchange-rate risk. You may lose on the exchange rate what you make on property appreciation and rent, although many experts feel that the Chinese authorities are holding the renminbi at an artificially low rate to support exports.The current value of the RMB can be checked here.

Bringing foreign currency in to China in order to invest in real estate is not very straightforward. We experienced many problems with this when we started investing in China, but by trial and error we found satisfactory ways of remitting money into the mainland. Please contact us if you would like advice on this topic.

Hong Kong is a huge beneficiary of China's rapid growth. It is a joke in China that increasingly "One country two systems" is giving way to "One country, one system and that system is the Hong Kong system". Market capitalism as practiced in Hong Kong has been both hugely successful and hugely influential in China. The respect that the Common Law based HK system gives to economic freedom - the untrammelled right to buy, sell and produce - has made it a very attractive place for multinationals to establish their base in Asia, and for foreigners to invest in real estate.

The principle advantage that Hong Kong has over the mainland is the ease with with non-residents can obtain finance for purchase of investment property. This makes the equity required to purchase an apartment in HK, especially for a locally-based investor, hardly more than that required to buy on the mainland, in spite of the near ten-fold difference in price. Of course the higher gearing comes with greater risk, both downside and (more importantly in the psychology of the property bull) upside.

This article in the Macau Daily Times gives some extra support to the argument that demand from Macau will drive prices in Zhuhai. The other aspect of the argument is that luxury apartments will give the best return. This certainly has been the story in Hong Kong, and throughout the world, as increased income inequality has driven up the price of positional goods such as property in exclusive locations.

Tourism from the USA and from Europe will also contribute to some demand, although this will me a small driver for some years. The apartments mentioned in the article are of a standard that will be appealing to first world visitors.

Even if the apartments specifically mentioned in this article are fully sold, I am confident that resale apartments there will be available and, certainly, apartments in comparable blocks are available. Please call for details.

The Hong Kong property market, particularly luxury apartments on HK Island, are in very short supply and are set to extremely well this year. Gold and China property remain top of the list of tips for investement for 2008.

 

Location(s)

The total gross gaming revenue further surged 48.9% YoY to over MOP
19.7 billion in 2Q 2007. In the first half of 2007, the total gross
revenue in Macau recorded MOP 38.4 billion, 42.5% more than that of
Las Vegas Strip in the US over the same period. As at the end of 2Q

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Wuhan is the capital of Hubei province, and is the most populous city in central China. It lies at the east of Jianghan Plain,and the intersection of the middle reaches of the Yangtze and Han River. Arising out of the conglomeration of three boroughs, Wuchang, Hankou, and Hanyang.Wuhan city is known as the thoroughfare of 9 provinces,It is a major transportation hub, with dozens of railways, roads and expressways passing through the city.The city of Wuhan, first termed as such in 1927, has a population of approximately 9,100,000 people (2006), with about 6,100,000 residents in its metropolitan area. In the 1920s, Wuhan was the capital of a leftist Kuomintang (KMT) government led by Wang Jingwei in opposition to Chiang Kai-shek,now Wuhan is recognized as the political,economic,financial,cultural, educational and transpotation center of central China.

It is, in principle, possible to obtain mortgage finance, as a foreigner, to buy investment property on the mainland. It is certainly much easier in Hong Kong, and possibly easiest, if on the mainland, in Shanghai. However, as stated on the Oxford and Associates website:

There are plenty of banks in China (international and domestic) willing to lend money to foreigners, including some familiar names such as HSBC. Normally you need to put down a 30% deposit. Lending can be in local currency (Renminbi) or US Dollars. Rates are variable, capital repayment only (although they are starting to think about 'interest only'), and the term depends on the type of property and the age of the borrower. Similar checks and lending policy apply as in Western countries: identification and proof of residency, and proof of income.

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As the South Gate of China, Guangdong has been opining to the outside world for a long time. In Deng Xiaoping's inspired policy of 1978, three special economic zones, Shenzhen, Zhuhai and Shantou were created. Since then, Guangzhou, Zhanjiang, the Zhujiang (Pearl River) Delta areas and the whole coastal regions, amounting to more than 100 ports, have been opened. This has resulted in a rapid development of industry. The agricultural sector which is concentrated in the production of rice and fruit growing and fishing, has also grown rapidly the collective farm policy was abandoned in the early 80s.

Containerized export is very important: ocean-going ships can travel from Guangzhou or Zhanjiang to South East Asia, Africa, Europe and America, and more than 40 ports in Shanghai , Dalian, Tianjin, Qingdao, Nantong, Ningbo, Yantai, Fuzhou, Xiamen, Wenzhou and Beihai. Moreover Guangdong is one of the few provinces in China where the highways have been developed into a viable network serving the whole province. There are four railways: Beijiang to Guangzhou, Guangzhou to Jiulong, Guangzhou to Maoming and Litang to Zhanjiang.

It is easy to set up a limited company in HK. This is one of the many sites that offer the service at the click of a button. I am thinking of using a corporation to hold property in HK and possibly China. I have been told that it is possible to use a HK-registered company as a way of getting around the restrictions on foreign ownership of apartments in Shenzhen, Beijing and Shanghai. I have not been able to establish this with complete certainty as Chinese estate agents are not famous for their detailed understanding of local ordinances elating to foreign ownership.

HK is a very attractive jurisdiction on account of its Common Law tradition, English Language basis and low-tax policy. Corporate taxes are applied only to activities within HK itself, so establishing a HK company to do business in China should not result in any tax payable to HK authorities.

Costs are reasonable, although financial reporting requirements are quite strict, at the moment. I am holding back from spending more money on another overseas incorporation now, but if anyone would like to share the costs of a corporate veil then please get in touch.