Foreign outlay on Shanghai property falls
Foreign investment in Shanghai's property market fell by more than 40 per cent in the first four months of this year because of measures aimed at limiting asset price rises, such as restrictions on foreign capital and luxury development.
From January to April, Shanghai - the mainland's premier financial centre and a hot spot for property speculation in recent years - attracted US$690 million in promised foreign investment in its property sector, a 42.23 per cent drop from the same period last year, the municipal government said.
The pledged investment in the sector accounted for only 15.9 per cent of the total foreign direct investment (FDI) in the city during the period, Xinhua quoted municipal government data as saying yesterday.
There were 32 approved foreign-invested property development projects, the report said.
Beijing has engaged in a campaign to crack down on speculation in the property market since 2005 - the leadership fears that rising home prices will trigger social instability, with home ownership beyond the means of most families. The government is also worried about the boom in the sector and the danger of overheating it poses to the national economy. The campaign is partly attributed to the dismissal of Chen Liangyu , Shanghai's former party boss, who defied a directive to cool the market.
Although the mainland property market is driven mostly by domestic spending, foreign buyers have increased as speculation of a further appreciation of the currency encouraged foreigners to hold yuan-denominated assets.
The large influx of foreign capital to the property market is believed to be one of the key factors driving up prices. Media reports suggest that global players like Morgan Stanley, Citigroup and ING have poured billions into the mainland property market in recent years and more newcomers are waiting their turn.
In response, the central government recently adopted measures to restrict the inflow of foreign capital into the sector.
Figures from the National Bureau of Statistics show the country's property sector absorbed a record US$8.23 billion in foreign direct investment last year, up 51.9 per cent year on year.
Foreign funds invested in Shanghai during the first four months of the year totalled US$2.7 billion, up 2 per cent from a year ago.
However, foreign investment in hi-tech industries and value-added services has grown remarkably during the period.
Shanghai's property market has showed signs of cooling in the past year, despite housing prices in all main cities continuing to appreciate impressively.
The average price of homes in Shanghai fell 3 per cent in the first quarter of this year. This compares with a 9 per cent increase in the same period last year.
Signs of cooling
Contracted foreign direct investment in Shanghai in the first four months of the year (in US dollars) $4.32b
This was down year on year by 7.19%
