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Is it a good investment for a foreigner to purchase a flat/apartment in China? Why, or why not?

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    I'm reminded of a wise investing axiom I once read: "Investing knowledge is inversely proportional to the square of the distance." In other words, the further away you are from your investment the harder it is to have all the relevant information to make wise choices. – Muro Feb 10 '11 at 13:20
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    More details would be helpful. Do you intend to live in the apartment while working there? Rent it out? Do you have any knowledge of real estate in China? Do you have any experience owning rentals? – Alex B Feb 10 '11 at 17:06
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I think a greater problem would be the protection of your property right. China hasn't shown much respect for the property rights of its own citizens - moving people off subsistence farms in order to build high-rise apartments - so I'm not certain that a foreigner could expect much protection. A first consideration in any asset purchase should always be consideration of the strength of local property law. By all accounts, China fails.

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    You intend to make a billion Chinese ninjas your enemies ?? – DumbCoder Feb 10 '11 at 12:10
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China is in the middle of a residential housing bubble, and now is probably a horrible time to invest in real estate in China.

Even if China wasn't near the peak of its bubble it would probably still be a bad idea because owning real estate in a foreign country is expensive and risky. There are real currency risks, think what would happen if the yuan declined significantly against the dollar. There is also the risk of the government seizing foreign held investments (not extremely likely but plausible). Another consideration is that it would be next to impossible for you to get a loan to purchase a property US banks wouldn't touch it with a 10 ft pole and I doubt Chinese banks would be very interested in lending to foreigners.

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No, it's not.

This could be a great question, but with no background, not so much. Do you live there now? For how long, and how much longer? You say investment, are you looking to live in it or rent it out? I have nothing against China, but I'd not buy anywhere unless the price, location, and timing all were right.

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It is a lousy investment to purchase an apartment in China. Chinese citizens purchase apartments in China because, well... here's how China works:

  • There's this one-child policy; you may have heard of it.
  • 1 child per couple => 4 grandparents for each child to support in old age, which is too much, so don't count on your grandkid supporting you in your old age.
  • Sounds like you'll need to save a lot of money for retirement.
  • All the banks give you negative real interest rates (i.e. your savings won't keep up with inflation) so they can finance their big state-owned enterprises. Then the rich jerks in charge can overpay themselves.
  • There are limited opportunities to deal with this, in part due to China's restrictions on its own citizens. Property ownership is one inflation hedge and starts to look really good in comparison, even if it's risky.

There's some fundamentals driving Chinese property values higher, but mostly it's a bubble caused by those reasons.

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More infomation is needed for any meaningful discussion about this. I just assume you want to buy in China mainland, not Hongkong or other places.

That depends on where you want to buy the flat. Which city, which district of the city, which community, which school district, how old is the building? Furthermore, always bearing in mind that you don't own the land when you buy a flat in China mainland. The land is always state-owned, you are renting the land.

Someone will say that the real property market in China is always in a bubble, but because the ownership of the land is different from countries like US and other things like one-child policy, things are not that easy to tell.

But if you don't live in China now and you don't have clients ready to rent from you, I don't think it is a good choice right now to buy one just for investment.

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