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BEIJING, Dec 25 (CEIS): As many Chinese real estate developers are cornered for limited capital, they will have access to more overseas investment that enters China, according to a financing expert.
Peng Gang, general manager of Merrill Lynch & Co's China branch, said in Beijing at a business conference that foreign capital will help solve capital shortage among Chinese real estate developers.
Currently, most Chinese real estate developers only have 25 per cent own capital when launching a new housing programme, with the rest 25 per cent from the bank loans and the rest 50 per cent from pre-selling of the houses, said Peng.
The Chinese government tightened the macro control over the real estate industry starting from April this year, targeting on the over-fast hiking house prices.
When more and more Chinese banks narrowed their loans to the real estate developers, the embarrassment of capital flow for a large number of Chinese real estate developers caught the attention of overseas investors.
Fang Chao, Chairman and CEO of the Beijing Guohua Co Ltd, forecasts that China will see a boom of overseas capital flow into the real estate industry in the next year, which will accelerate the expansion of China's commercial real estate programmes.
Sources from Chinese Ministry of Construction said though the housing prices are getting down in China under the macro control, China's real estate market will still grow in full swing in 2006.
In February this year, Merrill Lynch & Co, which owns 1.5 trillion US dollars world wide, announced to enter China's real estate market by investing 30 million dollars on the highest building in Beijing-the Beijing Yin Tai Centre, joining hands with China's Yin Tai Holding Co Ltd.
Though Morgan Stanley once worn overseas investors against the bubble in China's real estate market, the company itself increased its investment in China with housing projects covering major Chinese cities including Beijing, Shanghai and Guangdong.
Morgan Stanley also said it will increase its investment in China in the next year and expand its market strategy to some middle-scale Chinese cities.
Besides Merrill Lynch and Morgan Stanley, more and more overseas investors like ING from the Netherlands are also seeking accesses in China's real estate market.
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