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Chinese cities lead top table for investment prospects in 2010, survey shows

Shanghai, Hong Kong and Beijing are named as the top three real estate investment prospects by the Emerging Trends in Real Estate Asia Pacific 2010 report from the Urban Land Institute and PricewaterhouseCoopers.

Shanghai, Mumbai, and New Delhi are top for  real estate development opportunities, followed by Ho Chi Minh City.
The report ranks Shanghai at the top due to the government’s decision to infuse the Chinese economy with liquidity which has led to a lending surge and a sharp rebound in property prices. In terms of development opportunities, Shanghai also occupies first place in the survey for development opportunities. The report points to a surge in land purchases by developers in the city and a high interest on retail and residential sectors.

Property prices in Hong Kong have been influenced less by capital flows stemming from the government, the report says. It picks out the retail sector as being particularly strong.

Beijing has jumped up nine spots from last year to third place as an investor favourite. ‘Capital flows continue to rise following the sudden reversal in financial fortunes in the first quarter of the year. Both the residential and manufacturing sectors are viewed favourably by survey participants,’ the report says.

In Mumbai development has increased in all property sectors with construction of affordable housing regarded as particularly strong. Lower mortgages rates makes it likely there will be a huge demand for the middle class and the real estate sector is not dependant on overseas demand, the report points out.

A rapidly expanding middle class will be the driving force behind growth in the real estate sector in Ho Chi Minh City, the report says. In addition to residential opportunities, growth of the middle class has triggered interest in retail development.

The report, based on the opinions of more than 270 internationally renowned real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants, adds that both pricing and rentals in the region fell steeply in 2008 and early 2009 in step with those in the West. But markets across the Asia-Pacific region were boosted in the second half of the year by the remarkable resilience of the Chinese economy, which has been buoyed by a series of fiscal and monetary stimulus measures.
‘As a result, many Asian markets have begun to flash positive signals toward the end of 2009. Transaction volumes have rebounded, albeit from a very low base and led overwhelmingly by China,’ the report concludes.