The Henley Group -aboutus

China's government has approved a new set of regulations placing further restrictions of foreigners buying property in the country. The new laws, updating draft regulations issued earlier this year, are intended to prevent the emergence of a property bubble in China's major cities and to ensure that property prices remain within the grasp of ordinary Chinese citizens.

The major new developments in China's ongoing attempt to control foreign influence over the country's property market include the stipulation that non-Chinese must now have worked or studied in China for at least 12 months before being allowed to invest in real estate in the country. Furthermore, foreigners will not be allowed to buy residential property that is "not for their own use or habitation"; the precise meaning of "own use" has yet to be defined, according to analysts, leading to the possibility that loopholes may still be found that will allow investment purchases to be made by non-Chinese buyers. Foreigners (including foreign companies) wishing to buy property not for their "own use" may still purchase through the formation of a Chinese-registered company.

While this does not rule out our interest in China, until some of the regulations become clearer we are going to take a watching brief.

Malaysia's housing market has been slow and steady in 2006 with Bank Lending rates increasing slightly to 6.75%. GDP is forecast to grow by 5.7% between now and 2008 and the property outlook remains very positive. Our Tiffani project has sold extremely well and phase two sales in Kuala Lumpur have been selling at a 10-15 % premium of the prices attained for our clients. There are now very few units left in this development. Demand has been driven by favourable tax treatment, strong yields and low entry prices. A UBS report recently cited KL as the cheapest capital city in the world to live in.

Vietnam, as evaluated by the World Bank and UNDP, has one of the most stable political systems coupled with economic growth ranked amongst the highest in the world. It has achieved strong economic growth results year on year and is ranked as the 2nd fastest growing economy in South East Asia. With WTO accession increasingly likely in the next six months, Vietnam is an attractive emerging market, in particular the property sector.

In 2005, Vietnam reached a GDP growth rate of 8.4%, the highest level within 7 years since the Asian economic crisis in 1997 and much higher than 7.7% in 2004.

Ho Chi Minh City has long been regarded as an economic hub of Vietnam thanks to its perceived superior infrastructure, strong business links with the outside world and convenient geographical position. According to the City's plan, it is expected that 103 million sqm of housing will be needed by 2010 in order to achieve an average housing area of 14.2 sqm per capita. The outlook for the residential property market in HCM City remains positive as it is still very under developed and is now attracting foreign buyers due to new liberalized housing regulations. Currently, 65% of the population in Vietnam is below the age of 35 and therefore it is a market full of young consumers. For these reasons, Vietnam will feature heavily in terms of properties available in the coming months.

I visited Poland in August and was impressed with what I saw. Poland is another export driven economy with both low inflation and tax rates as well as a stable political system. With low interest rates and good bank lending the property market especially in Warsaw and Krakow has had a very strong 12 months. That said, it still lags the growth attained in markets such as Bulgaria and Estonia and offers cheap market entry. With its imminent entry into the EU, Poland offers high long-term capital growth with relatively low risk. Again, we expect to have properties available in Poland in the near future.