What’s a real estate speculator to do once the government clamps down on housing investment?
Look for the next available property bet.
One example of this is Wenzhou, a city in China’s wealthy Zhejiang province.
Ever since the government restricted purchases of residential homes in mid-April, local property punters have shifted their focus to real estate alternatives — such luxury apartments and more importantly, commercial real estate.
“Though recent tightening real estate policies have made property investment riskier, it is still a comparatively safer bet than stocks. And because of the strong inflationary expectations, you have to find a place to put your money,” Wang said.
Wang’s thinking is quite typical among Wenzhou investors, regarded as the most astute business people in China. Industry experts estimated that Wenzhou’s private capital could be around 600 billion yuan. Due to limited investment channels, quite a number of them still chose property as their primary investment tool. But this time, they are looking to commercial properties and high-end residential projects.
Lu Yin, director of Zidoo Group Co Ltd, the developer of the BDA Plaza in Beijing’s Yizhuang area, said enquiries from potential buyers had increased by 40 per cent after real estate tightening took effect.
Commercial real estate is trading at lower prices per square meter than residential housing in Wenzhou according to China Daily. Combined with the prospect of steady yield, it’s thus being regarded as lower risk by many wealthy individual investors. Regulations will likely have to be tightened here as well, in order to put out the inevitable speculative fire.