No plan to tax capital gains but new property tax to be launched

January 10th, 2008

China has reiterated that it has no plans to tax capital gains, contrary to market speculation. Forbes reported via Shanghai Securities News reported, citing the State Administration of Taxation (SAT).

Individuals with annual personal income of over 120,000 yuan are required to submit a tax disclosure form. Forbes writes that speculation of a gains tax arose when the 2007 tax form required detailed disclosures of individual gains from property and stock transactions. The article quotes media reports that a new property tax is expected to be introduced this year as part of a unified property tax bringing together housing property tax, city real estate tax, land value-added tax and land leasing fees.

Source: Forbes

China probes foreign investment

January 9th, 2008

A survey initiated by the State Administration for Industry and Commerce (SAIC) has sparked concerns that new moves may be on the way to curb foreign investment in the real estate sector. The survey was announced via an “urgent notice” on the official Web site of the SAIC’s Registration of Foreign Invested Enterprises unit. In its article, Money Morning quotes Asian investment expert Jim Rogers as saying that even if China’s stock market were to plummet, that country’s economy would remain healthy, and would continue to advance unchecked.

Currently, only foreign institutions establishing branches or representative offices in China and individuals working or studying in China for more than one year can purchase apartments for their own use.

On another note, the government’s focus on affordable housing for low-income households may be having an effect. Last November, local authorities were urged to reserve at least 70% of residential land to low-rent or low-cost homes. CRI quotes analysts as saying the drop in floor space of marketable, unsold buildings from 4.5% to 117.97 million square meters in November may be a result of this move. Little or no foreign investment is in the low-end segment.

China Radio International
Money Morning

Raw material shortage?

January 4th, 2008

Danish housing billboard  Danish housing billboard - close up Flying out of Copenhagen airport after the holidays, we spotted the above ad from a Danish real estate & relocation firm surprisingly targeted, not at clients, but at potential house owners about to be posted abroad, it reads:

“Would you like to lease out your home when you move abroad? Let us find a tenant who will appreciate your home as much as you do.”

In Beijing, a majority of high-end landed properties are investment properties (as are high-end apartments). In Denmark, most houses are owner occupied. Investment properties are commonly urban apartments. Denmark has traditionally had a very Danish work-force. The first batch of Indian doctors arrived last year.

On another note, my chemist cousin PA was also on the flight to Beijing. His company had put up a similar sized billboard very near the gate SAS uses for its Beijing flights. Thought it might be to impress Chinese clients coming on visits. Yes, but not quite. The firm needs people and the billboard targets potential recruits.

China World Tower 3

December 14th, 2007

China World Tower 3 nearing completionWith the main structure complete, the media has given a lot of attenti   on to Rem Koolhaas’ CCTV tower . We’re more interested in China World Tower 3, the newest addition to Beijing’s first high-end office complex scheduled for completion this year. The first buildings were completed way back in 1990.

It’s meant to overtake faded Jinguang as Beijing’s tallest building at 380m high with an auspicious 68 floors. Typical of Robert Kuok’s people to keep it all low-key despite its prominence on the skyline. Hadeed & Koolhaas’ Beijing edifices may get pride of place in the glossy books but China World will be the premier office address. Why? Functional design, quality materials & maintenance.

- Excuse the dreary camera-phone pic.

More restrictions on real estate loans expected in 2008

December 12th, 2007

With real estate prices increasing by 10.5% over a year from November, the government is expected to further restrict monetary policy for property developers and investors. Zhang Tao, deputy director of the finance research department at the People’s Bank of China, had earlier in the year mentioned that bank loans provided more than half the capital controlled by China’s property developers. An anonymous quote from the director of a State-owned property developer predicts that banks loans to the property industry may drop by as much as 50 percent in 2008.

Source: China Daily

New subway construction in Beijing

December 8th, 2007

Five new subway lines totaling 140km started construction in Beijing on Saturday. They will be completed by 2015. The first phase of Line 10, Line 8 and a 28-km line linking the city to the airport are currently under construction. The Olympic and airport line will be completed before the games next year.

Beijing currently has 142km of subway lines but plans to have 561km by 2015. There are 1.2 million private cars in the city and about 1,000 new cars appear on the city’s streets each day.

Source: China Daily

Bank reserve ratio raised 1%

December 8th, 2007

The central bank has announced that effective 25 December, China will raise the reserve requirement ratio by 1% for commercial banks. This pushes the ratio to a new high of 14.5% and is the 10th reserve ration increase this year. The move follows the government’s announcement that it will shift it’s monetary policy from “prudent” to “tightening”.With the coming CPI for the first 11 months expected to reach a new high, this move is aimed at stemming inflation rates. It is estimated that this will reduce liquidity in the market by RMB400 billion.

Source: China Daily

Insider’s Guide to Beijing 2008

December 6th, 2007

Finally got my hands on the Insider’s Guide to Beijing 2008. Found it in, of all places, the good ole friendly Friendship Store on Changan Jie. Strangely, Jenny Lous isn’t stocking it yet.

Lihong’s insights have been quoted in every edition since the guide was first published 3 years ago. This edition includes our thoughts on rents in the Olympic year. Thanks Adam & John for putting our name up in lights.

It’s by far the best contemporary Beijing guide. Lonely Planet doesn’t come close to what this reference achieves. Packed with entertaining yet useful information, what always impresses me is how in-depth the articles are. Also, little or none of the content is re-hashed from last year’s edition. Get one even if you’re only considering moving to Beijing.

Beijing more expensive than Singapore?

December 4th, 2007

Here are some excerpts from a 2 Dec Singapore’s Straits Times article: Expats here are feeling the pinch too. (subscription only)

  • ‘The ECA International survey showed Singapore rising 10 places to rank as the ninth-most-costly Asian city for expats.’
  • ‘Private home rentals have jumped by 32.2 per cent since January, compared with 14.1 per cent for the whole of last year.
  • ‘…soaring rents have prompted many multinationals to increase expat pay by up to 30 per cent.’
  • ‘I can live in Dubai for the same amount. But there, my company can charge up to thrice the price for our services.’

The article also reproduced ECA’s top 10 list of most expensive cities (below).

  1. Seoul
  2. Tokyo
  3. Yokohama
  4. Kobe
  5. Hong Kong
  6. Taipei
  7. Beijing
  8. Shanghai
  9. Singapore
  10. Guangzhou

Beijing and Shanghai are ranked above Singapore. But like any statistic, readers need to contextualise, or subscribe to ECA’s full report. Grade 1 fees at WAB (RMB146,535) may be pricier than at United World College (RMB107,311). But a liter of milk at Jenny Lou’s is cheaper than one at Cold Storage or Jason’s. We won’t get into the cost of a bowl of Niu Rou Mian here vs. one at Newton’s Circus.

Housing guidelines released for low income families

December 4th, 2007

New national guidelines have been released on housing for low income families. The guidelines were released by the Ministry of Constricytion, the National Development and Reform Commission and five other ministries. The guidelines will widen the income range of families eligible for these homes. Affordable housing should be around 60sqm. Eligible purchases will have limited property rights. The properties can be sold after 5 years. Cooperative housing is now limited to independent mining corporations on the outskirts of cities and enterprises with a significant number of employees with housing problems. However, development must be done on their own properties.

10 million households still live in a housing space of 10sqm per capita according to the Ministry of Construction’s statistics.

Source: China Daily