Investing in real estate can be a great choice for many businesses and individuals. While many people understand the basics of real estate investment in the United States, it can be challenging to understand how real estate investments work in other countries. The following guide explores how to invest in Chinese real estate.
It’s important to understand the differences between property rights in China and the United States. In the United States, an individual can own his or her own property. While the US government may seize land under the law of eminent domain, most homeowners don’t have anything to worry about. In the United States, capitalism is king. People are able to privately own their property and can maintain rights to it.
China is a hybrid capitalist-communist country. In China, no one own his or her property. While many people build homes every year in China, the land underneath the home is usually leased from the government. Under the terms of the lease, the government is allowed to seize the land when it wishes.
Over the past few years, there have been thousands of cases where homeowners in China have had their land seized by the government. In most cases, land is seized to build new housing developments or industrial facilities. In many of these cases, homeowners received minimal compensation for the value of their land. Because of this, it can be challenging to invest in Chinese infrastructure.
One of the best ways to invest in Chinese infrastructure is through a large company. While not all companies are state-owned, many Chinese companies have a favorable reputation with the government. Many large companies have what is known as a “red phone.” The red phone connects the managers and industry leaders of Chinese companies with the Politburo, the ruling Chinese party. This allows companies to have privileged access to a variety of resources.
For investors, you can invest in Chinese REITs to own china real estate without the extra risk.
It’s important to make sure that any investments in China are done through a well-known company or investment group. Since many private properties are subject to seizure, it’s essential to avoid buying a piece of property that is considered low value. Under the law, the government is not required to compensate individuals if their land is seized.
While investing in China can be a challenging experience for many businesses and individuals, it can be a financially rewarding venture too. However, it’s essential to research any investment opportunity thoroughly before making any large decisions.
While his background is mostly related to trading stocks, he recently gained interest in real estate crowdfunding with Fundrise.