While China has unquestionably been going through a period of extreme economic growth in their property markets, the benefits of that growth has largely only been seen in the major Chinese cities. While there are exceptions to this rule, most analysts will immediately point to places like Beijing and Shanghai as being the places with massive property expansion.
However, a curious combination of circumstances might be just what is needed to change that trend. Not only is foreign interest in the Chinese property market continuing to increase, but the over-regulation of the Chinese government on foreign ownership of property in major cities has resulted in many investors starting to take a look elsewhere within the country. Specifically, that elsewhere has resolved itself into the second tier cities in China.
These cities do not have nearly the amount of foreign investment that the major cities do and with large populations and land areas, it is going to be quite awhile before those cities get to the threshold level where the Chinese government would start instituting regulations in order to prevent increased foreign ownership. This makes them extremely attractive to the foreign demand for Chinese property that has gone up even in spite of regulatory measures taken by the Chinese government in hopes of preventing the emergence of a property bubble.
In fact, major banks such as UBS (based in Switzerland) are expected to increase their operations within countries like China this year and because of the restrictions on investing in major cities, the idea of the second tier getting a large chunk of that monetary pie is one that is almost assuredly going to take hold.
Ultimately, this means a rise in prices in second tier cities because of the high demand and that in turn means that some quick gains are there to be made for people that take the initiative in investing money in the property markets of those cities.
