THE cooling love affair between overseas property-related companies and China may be rekindled following the central government's planned reform programme for the mass-market housing construction industry. The attractiveness of the mainland real estate market for overseas investors has been fading since austerity measures were imposed by the central government in the second half of 1993 to curb the overheated property sector. The measures, mainly involving a credit squeeze on property developments and a ban on construction of new luxury projects, have resulted in a drastic slowdown in the entire mainland real estate market. The weakened state of the mainland property sector has not only dampened overseas developers' enthusiasm for mainland property: it has also slashed investment opportunities in property-related companies, such as overseas construction firms and building material manufacturers and suppliers. After a couple of years of weak market sentiment, foreign property-related firms feel there may be renewed potential for investment. Their belief is driven by the central government's proposed reforms on mass-market housing construction. Xie Jiajin, vice-director of the Ministry of Construction's real estate department, said: 'Inviting overseas companies' participation in housing construction reformation is under consideration.' The plan, which has not yet been formally announced, proposes mass production of standardised building materials for use in low-cost housing schemes around the country. The concept is similar to Hong Kong's Home Ownership Scheme, under which housing of a similar design is built with standardised building materials. By so doing, suppliers can benefit from economies of scale and pass this on in the form of cheaper prices for materials. Such materials will be available for use in both state-managed anju housing programmes and other private-sector housing projects for lower to middle-range sectors. Officials hope the move will both ensure better controls on quality and shorten the construction time. 'Mass production of standardised housing will also reduce construction costs,' said Ms Xie. It would increase residential development productivity and improve quality by upgrading building technology, she said. To carry out the construction reform programme, the Ministry of Construction is considering transforming old state-owned enterprises into new bases for producing mass building materials for modern homes. Because this is a new concept for China's housing construction industry, the process will require technological support from international companies, according to Ms Xie. Overseas financial support is also needed for the extensive project. 'Japanese companies have expressed an initial interest in the development,' said Ms Xie, who recently toured Japan to investigate the country's housing construction industry, Liu Xingmin, division head of the Construction Ministry's real estate development, said: 'Overseas investors will see a great investment potential in this extensive housing industrialisation programme.' Low profit margins in mass-market housing projects, partly caused by increasing development costs, have caused reluctance among overseas developers to enter the sector. China has set the standard for acceptable urban housing conditions at 86.11 square feet. In an effort to achieve this, the Chinese Government's next five-year plan calls for the construction of a total gross floor area of 2.58 billion sq ft each year, according to Mr Liu. The total developable area over the next five years would reach more than 20 billion sq ft, he said. Property consultants said the plan might attract some interest from foreign material suppliers. But they said it was hard to make a prediction at this stage until the details of the reform plan were announced. The plan, which has been approved by the State Council in principle, is expected to get official endorsement next month. It forms part of the newly announced ninth five-year plan for economic and social development in the coming five years. Mass-market housing was the main element of real estate development under the ninth five-year plan, Ms Xie said. The goal was to improve living space through the launch of a private home ownership scheme. 'Over the past 15 years, we put an emphasis on developing the quantity of residential space. We will put more effort on improvements in quality in the next five to 15 years,' she said. Residential property management is also one of the top priorities of China's housing development programme under the ninth five-year plan. With the fast pace of growth in the domestic residential market, the Central government is aiming to promote higher professional standards in building management to upgrade living quality further. The development of the property management industry has been an initial success in some coastal cities, such as Guangzhou and Shenzhen, and is expected to be launched widely in other cities over the next five years.