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 RE: advice on foreign investment in real estate in China |
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Diamondhorse
警告次数: 1
头衔: 海归中将
声望: 博导
性别: 
加入时间: 2005/11/01
文章: 4896
海归分: 442560
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作者：Diamondhorse 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
This is a big topic, regarding foreign investment in China in general and real estate investment in China in particular. It is beyond my feable mind to tackle this. However, it should not be preventing me just say a word or two.
Depends on who you are. If you are a financial adviser in the US or any similar countries that have laws protecting individual investors (this can also be argued, but we can say this with relative comfort that there are better legal protections here in the US), you would be better off not to advise any of your clients in putting money in speculative real estate investment in China. If your clients are pretty well to do, you can suggest them to invest in apartment projects in the US cities where job growth is good. Not in luxurious apartments or condos in parts of Florida and Las Vegas. They are cooling off. However, affordable apartments are still in high demand. Also, senior assisted living projects also can provide good return. Buy an existing apartment, convert it into a senior assisted living business. It requires certain expertise like hiring a social worker and/or someone with medical training in the staff. Regulations might differ from state to state.
Real estate investment in China provides high return, if you have very good government connections. However, this is something very elusive. I have good contacts in China telling me they have an extremely low prices land available. It is still not for open bid yet. They have insiders who have control of the property. It can be sold (lease rights) for one third less than the market value. If we could get this land, we could make millions upon milliions of dollars. (Total area 600 mu, each mu, the price difference is 500,000 yuan). Would you be willing to advise any foreign investors in the US to invest in this kind of deal? There are several problems here:
First, I do not know if you have the right conscience to do something like that. This is selling out economic interests of the current stake holders of this piece of land. I know it belongs to a large factory, but now in distress. If, without these rotten insiders, it might fetch a much higher market price. The former workers and their families could probably have a better piece of pie. I don't think people with right conscience can do it, except for people like Zhou Zhengyi, the Shanghai scoundrel who had some powerful backings.
Second, how can you tell this is not a trap? You might be able to raise $100 million dollars to secure the land, only later you would be told that such dealings, without going through the open bid is illegal and, you know what it means when they say it is illegal. Your investor might just kiss its money good bye and the only positive experience they had would be from the wining and dining. Yes, granted that my contact is my buddy, or 铁哥们. He probably would not cheat me into this kind of trouble. However, there might be more powerful people over and above my buddy's cousin or whoever, and when they see or smell blood on the prey, they want also jump in and kick you out. We see too many cases like this and sadly, there are so many interest groups in China now and so many people want a piece of action when they see an opportunity. This is not necessarily bad. It comes with the territory of market economy. However, there should be effective game rules. It is not to say that people in the US are better. If you ever watch Western movies, you should know that when they started all this (capitalism), they were thugs and bandits, thieves and murderers. However, they gradually built up a system that most people now can play in the system. In China, different levels of interest groups have just realized the tremendous value of real estate, and the government is still finding ways to get this game rules to be set up. It is still not mature. and therefore has huge risk exposure for foreign investors.
Of course, if you say "在商言商" "赚钱没良心", I cannot argue with that. As long as you can make money, go ahead, anything is fair game. However, I have to say it is not my type a cup of tea.
作者：Diamondhorse 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 RE: advice on foreign investment in real estate in China -- Diamondhorse - (4106 Byte) 2005-12-13 周二, 01:12 (1354 reads)
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