China's new policy on overseas investment in the property sector has already had a major impact on high-end customers' purchasing behavior in Shanghai, according to a survey conducted in the city.

 

About one-third of the respondents to the survey said the issuing of the new policy has had a "great" impact upon their individual purchasing or renting behavior.

 

The survey was conducted on August 4 and 5 by the corporate communications department of Midland Realty, China (Shanghai).

 

It questioned around 3,000 of its high-end clients, either house owners or potential purchasers, in six major districts of Shanghai Xuhui, Jing'an, Huangpu, Luwan, Changning and Pudong where Shanghai's high-end properties are concentrated.

 

The survey showed that 45 percent of those questioned believed the impact of the new policy would be "average," while 12 percent regarded the impact as "very small," and 10 percent did not believe there had been any obvious impact.

 

Feng Hongrui, general manager of Midland Realty, China (Shanghai), commented that high-end properties located in the above six districts "have long been favored by the foreign investors due to their excellent quality and advantageous locations."

 

Some of the high-end properties located in Xuhui and Jing'an, for instance, had previously attracted many foreign investors, but the new policy may dampen their enthusiasm, said Feng.

 

"They worry that once the practical details of the new policy are issued, it would make many major investors retreat from the market, and thus it may lead to the devaluation of their purchased properties," said Feng.

 

The survey also pointed to an increased mood of caution among property owners, with 44 percent of respondents saying that they planned to lease real estate they originally intended to sell, preferring to wait and see how the market develops. Those who want to sell their properties at a lower price, at a higher price or at the same price as before accounted for 10 percent, 16 percent and 12 percent respectively.

 

"The change from selling to renting properties will have some influence on Shanghai's high-end property renting market," said Feng.

 

The requirement of a genuine name for buying houses, selected by 45 percent of the surveyed potential house buyers, topped other factors such as the one-year limit on selling and tightened foreign exchange management, becoming the most important factor to influence individual house purchasing behavior.

 

(China Daily August 10, 2006)