China

A couple of decades from now, China, home to 1.3 billion people, is likely to have overtaken America as the largest economy in the world. GDP has quadrupled since the country’s Communist rulers began to move towards a limited market economy in 1978, with growth averaging 9.5% a year and exports surging more than 50% from 1997-2002. Such dynamism has fed through into a property boom. UBS Securities has estimated that urban land and property prices rose by 70% between 2001 and 2004, as money, much of it from speculators, began to pour in. Most foreign buying interest has so far been concentrated in Shanghai, the rapidly expanding commercial capital, although more adventurous investors have been looking at Beijing and Gunagzhou. The long march upwards began to falter in spring 2005, however, when authorities took fright at the extent of speculation and cooled things down, with prices falling by as much as 20% virtually overnight in some places in Shanghai, in particular. Prices have largely recovered since, and the long-term fundamentals continue to look good. Another bonus, over the long term, is the gradual appreciation of the yuan (the Chinese currency). This is nevertheless a market that you should go into with your eyes open.

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