BEIJING - Foreign investors recorded the biggest increase among the various financing channels for Chinese property developers in the first five months of this year as they bet on better investment opportunities amid the country's tightening real estate policies.

The foreign capital used by Chinese property developers jumped 57.3 percent year-on-year to 26.6 billion yuan ($4.1 billion) from January to May, the National Bureau of Statistics (NBS) said on Tuesday.

This compares with a 4.6 percent year-on-year rise in bank loans, a 30.9 percent increase from property developers' own capital and a 14.6 percent gain from other channels, according to the NBS.

The continuous appreciation of the yuan and rigorous property measures have created many more opportunities for foreign real estate investors.

"For foreign institutional investors, this year presents the best investment chance since 2007", said Grant Ji, director of the investment department of the real estate service provider, Savills (Beijing). "And they are particularly interested in commercial properties in China's central and western regions."

MGPA, a private equity real estate investment advisory company that manages $11 billion in assets in Europe and Asia, announced on Friday that its MGPA Asia Fund III had acquired a 50 percent interest in Galleria Chengdu.

"We believe western China merits close attention because the new high-speed rails are expected to have a dramatic effect on this region," said John Saunders, CEO of MGPA Asia, excluding Japan.

MGPA is not the only foreign investor showing strong interest in China's commercial property market. Others, too, believe the next decade is the time to make big things happen, after the investment boom in the residential property market over the past decade.

Wang Zhe, general manager of Tianjin-based Lecheng Real Estate Co Ltd, said a considerable number of foreign real estate funds have approached his firm about the possibility of a stake investment.

"Obviously, they are betting on the huge growth potential of China's retail sector, and thus the opportunity of a higher yield from investment in the commercial properties," Wang said.

The company's "Galaxy Mall" project, one of the largest shopping malls in Tianjin, has rented out around 60 percent of its floor space and is expected to begin operations next year.

"The rental exceeded our expectations and I expect it to grow further in the second half of 2011, due to robust economic growth and the government's efforts to boost domestic consumption," Wang said.

China Daily

(China Daily 06/15/2011 page15)