Thursday 11 December 2008
Cash-rich investors in hunt for bargains at home and abroad
With stock markets beset by uncertainty and volatility and showing no signs of stabilising anytime soon, a growing number of cash-rich mainland investors are on the hunt for bargains in both their domestic property market and markets in the United States.
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Cash-rich investors in hunt for bargains at home and abroad
Fulton Mak
10 December 2008
With stock markets beset by uncertainty and volatility and showing no signs of stabilising anytime soon, a growing number of cash-rich mainland investors are on the hunt for bargains in both their domestic property market and markets in the United States.
Bricks and mortar, they believe, will be a safer investment than equities in the current uncertain climate for financial assets.
Last month, a group of 53 investors from Shanxi province, consisting mainly of entrepreneurs and coal-mine owners plus several academics, flew to Beijing to view high-end residential projects with price tags ranging from 3 million yuan (HK$3.38 million) up to 10 million yuan.
However, most of the prospective buyers left disappointed, saying that prices were much higher than they had expected, according to a report in Fazhi Wan Bao.
Other wealthy investors are being invited by online property search portal Soufun.com to join a tour to hunt for properties in the US, where distressed sellers have sharply discounted asking prices.
Soufun is organising a 10-day tour that will depart from Beijing on January 15, and will take tour members to visit distressed luxury residential projects in San Francisco, Los Angeles and Las Vegas.
The tour prices range from 14,900 to 15,900 yuan each.
A Soufun sales executive, Ms Yang, told Property Post last week that more than 30 people had so far signed up and about half were planning to buy properties for their children who may study in these cities.
House-visiting tours and presentations will be arranged by local property agencies representing mainly distressed properties on which buyers have defaulted because of the subprime credit crisis. Asking prices are said to range from US$400,000 to US$1 million.
But while now may be a good time to search for bargains in the domestic or US market, some analysts expressed caution about the economic outlook for the United States, and said the country could have a long way to go before emerging from its current crisis.
“I believe that there are further corrections to come and therefore it is too early to buy - unless there is an opportunity to purchase at a price that reflects forced sales or distressed values,” said Nicholas Brooke, chairman of Professional Property Services Group.
Other analysts also warned that restrictions on remittance would create difficulties in funding an overseas property purchase.
Mr. Brooke added that careful due diligence on the history of the asset and any outstanding obligations going forward was important in buying overseas property.
“Any buyer needs also to be particularly conscious of not becoming over-extended just because the entry price appears attractive, as the cost over time may become expensive.”
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