By Hu Yuanyuan (China Daily)
Updated: 2007-12-06 16:12

Second-tier cities remain the key focus for domestic and foreign property investors for 2008, fuelled by their strong economic fundamentals and bigger profit margin, industry experts said.

"Though the property price of China's second-tier cities has seen a big jump this year, I believe there's still plenty of growth potential, compared with metropolitan cities that already have very high property prices," Chris Brooke, president & CEO of CB Richard Ellis, told China Daily.

Some second-tier cities, such as Tianjin, Hangzhou and Chengdu, have been well explored, while others like Shenyang and Wuhan are becoming more popular with investors, Brooke said.

"However, if the property price in those key second-tier cities grow too fast next year, real estate firms may turn their eyes to other second-tier cities and even third-tier ones," he added.

Sale prices of new residential apartments rose by 10.6 percent year-on-year in October, according to statistics from the National Development and Reform Commission (NDRC). Ningbo and Urumqi led the price hike, with rates of 19.1 percent and 18.5 percent respectively.

Beihai, a city at the southern end of South China's Guangxi Zhuang Autonomous Region, has been on the top of a list by the NDRC for four months in a row, for its skyrocketing property prices.

According to Eric Chan, deputy managing director of Savills, a UK real estate services provider, the first-tier cities will see major opportunities in high-end buildings, while those second-tier ones have bigger chances in industrial and logistics real estate.

"The attraction for foreign investors, in fact, is even more stronger after the Olympic Games, thanks to the big improvement in infrastructure," Chan said.

Meanwhile, as more Chinese property developers mull over listing plans, domestic real estate firms are going to have stronger power, Brooke said.

Henan-based Xinyuan (China) Real Estate has recently submitted an application to the New York Stock Exchange for listing.

"There may be more property firms seeking listings in other overseas stock exchanges, but the majority will still choose Hong Kong bourse, the most convenient capital market," Brooke said.