Breeze from Overseas

Sophia Xia, owner of Super City Group, offers insights into the overseas property market

CW: Given the current economic climate, why consider investing overseas?

Sophia Xia: In Shanghai, it's a prevailing trend that rich people who have already invested and owned two or more residential properties will consider future investment overseas. Smaller units in prime locations are very popular as an investment option with a stable return.

With the upcoming Expo 2010, is Shanghai still an attractive investment environment?

Yes, it is. For the residential property market, local buyers, encouraged by lowered bank loan rates, government stimulus plans and the rebound of the local stock market, are mostly purchasing for private use. Small apartment units in prime locations are still attractive to those planning to buy for personal use or investment purposes. However, investors for high-end luxury properties are mostly from overseas, so the demand for luxury residential properties remains inactive.

Private property and land ownership is not fully recognized in China. What about in other Asian countries?

The residential property tenure in China is currently for a term of 70 years and the land is state-owned, whereas in other Asian countries, most residential properties are sold with a freehold tenure and some, such as Malaysia, for a 99-and-up leasehold (30 years in Thailand).

What other details should potential investors take into account when looking to invest overseas?

In addition to the real estate golden rule (location), investors should also consider the eligibility of the developer, the taxation, stamp duty and solicitor fees (make sure to consider any hidden costs). Studying government regulations is a must. An encouraging, foreigner-friendly and barrier-free property investment climate will be a safeguard for overseas property investments.

How much leverage do potential investors have in the market right now? What can they ask for?

Currently in Shanghai, buyers can apply for housing loans at rates starting from 60 percent of the total purchasing amount. Some large-scale and renowned property developers can secure up to 70 percent for buyers.

Can you give us some tips on which countries have favorable markets for investment right now?

The Malaysian government has canceled the real property gains tax (a tax of up to 30 percent on previous gains). Foreigners also no longer require approval from the country's Foreign Investment Committee to buy residential properties worth more than RMB250,000.