When mainland property developers show their fear, foreign investors find it is time to show their greed.

Foreign funds and Hong Kong's property developers are enjoying a golden opportunity to step up their investments on the mainland amid the property-market consolidation.

The Olympics is a defining opportunity for the whole nation to demonstrate its peaceful rise to the world. However, according to a recent survey, the post-Olympics period is viewed as detrimental to the housing market.

Almost 40 percent of the respondents are pessimistic about housing prices after the Olympics, while about 35 percent think they will be steady. Overall, almost 80 percent hold negative views, and only 14 percent are positive about the housing market after the Games.

The latest transaction figures from Beijing, for instance, are also indicative of market consolidation.

According to government figures, 11,021 new housing units were brought to the market in July, 3 percent down, year-on-year. Average prices have declined by 17 percent to 13,051 yuan per square meter.

Both presale and spot markets registered 4,929 and 1,297 transactions, representing a dual plunge of 62.5 and 43 percent, respectively, from last year.

Apart from Beijing, Shenzhen and Guangzhou were reported to be two of the hardest-hit cities. The foreclosure crisis continued to shadow Shenzhen, though the city's banking regulator has ruled out such assertion. Housing prices in some submarkets of Shenzhen have dropped 20 percent since January.

Thanks to central government cooling measures aimed against market bubbles, foreign funds and Hong Kong's developers are flexing their muscles when mainland developers struggle to survive the difficult credit and political environment.

This month, the increasingly aggressive Morgan Stanley just bought a 30 percent stake in a resort project in Hainan, developed by Agile Property, which is valued at almost $3 billion.

Earlier in June, ING Real Estate said its new property fund will snap up undervalued lands and incomplete projects on the mainland, and even invest in distressed real estate companies.

For cash-loaded Hong Kong developers, such as Sun Hung Kai Properties, Henderson Land, Sino Land and Hang Lung Properties, land now looks much cheaper compared with just a year ago.

Henderson Land, for example, was the only bidder in a land auction last month, in which it successfully bought a plot in Nanjing at the original asking price.

A similar auction that took place last year could easily end up being four times what the local government asked for.

At a press conference in June, Hang Lung Properties likewise said that it is confident in acquiring 10 commercial projects on the mainland by the end of next year in such a bear market.

The author is deputy managing director of Vigers Asia Pacific Holdings.

(HK Edition 08/06/2008 page3)