In a new research report – Think: China – An overseas investor’s guide to China – TH Real Estate argued that due to China’s growth potential and favourable demographics, opportunities will emerge for real estate investors.
“[China’s] economy is predicted to continue to expand more rapidly than the rest of emerging Asia over the next 15 years,” the report stated.
“As the economy progresses along the value chain, from production to consumer, and financial and business services, immense opportunities are set to open up for real estate investors.”
The report said that while the opportunities are great, investors should nonetheless enter the market with “eyes wide open”.
TH Real Estate director of research Andy Schofield said: “Aside from the stock market gyrations that dominate the financial headlines, the medium-term test for the government will be to restructure debt and rebalance the economy from investment to consumption.”
“Success will require significant financial and social reform. We need to remain mindful of these ongoing issues as we assess real estate investment risk.”
However, the report found that China’s commercial real estate market will be supported by the growth in the number of white-collar workers, and the migration of people to urban centres.
TH Real Estate executive director and head of Australia Nick Evans said although Australian investors may not be ready to jump into China’s real estate market, they shouldn’t ignore it entirely.
The report found that by 2020, 60 per cent of China’s population will likely live in a city. China’s 10 largest cities, over the decade to 2012, increased their population by 35 million people.
Moreover, the number of financial and business services jobs in Beijing alone will likely increase by 2.7 million from 2016 to 2030.
“The sheer force of China’s demographics, and its mass urbanisation, will see the country transform in coming decades,” Mr Evans said.
“Long-term investors need to consider whether they can tap into this process in a risk-controlled framework,” he said.
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