Rents have moved up much less than prices in China over the past few years. As a result, in 5 cities in China – Beijing, Chengdu, Guangzhou, Shanghai and Shenzhen – gross rental yields are now a modest 4.42%, based on a sample of high-end used apartments (www.globalpropertyguide.com).

Shanghai’s gross rental yields average only 3.74%. These are lowest gross rental yields in our China sample, but then Shanghai is the only city where apartment selling prices have apparently not dropped, according to the China Real Estate Index System (CREIS) and eHomeday. Shanghai residential asking prices average US$2,742 per square metre (sq. m.).

Beijing apartments earn slightly higher gross rental incomes of around 4.21%. These are the country’s most expensive apartments, with an average offer price of average US$2,977 per sq. m. for the high-end used apartments in our sample.

Chengdu also has rather low gross rental yields, an average of 3.88%. Chengdu apartments are the cheapest among the five cities, at US$1,060 per sq. m.

The highest rental yields are in Shenzhen, where apartments in our sample earn gross rental yields of 5.69%. The high-end used apartments in Shenzhen cost an average of US$ 1,780 per sq. m.

Guangzhou apartments earn mid-range gross rental yields of 5.41%. Our sample of Guangzhou apartment prices averages around US$1,577 per sq. m.

BACKGROUND IDEA – RENTAL YIELD

What does “gross rental yield” mean? It’s very similar to the Price / Earnings (P/E) ratio in the stock market. Just as share prices have a P/E range, house prices tend to fluctuate around a rental yield range, research shows.

The gross rental yield is the annual rental earnings / the value of the property.

So if the rent is US$5,000 and the property is worth US$100,000, the yield is 5%.

Our rule-of-thumb is that a gross rental yield of 6% to 7% means a housing market is ‘fairly valued’, though importantly, developing country housing markets usually have higher yields than developed, because of structural issues discouraging housing purchase such as the difficulty of getting mortgage finance.

Where yields (and rental costs) are comparatively low:

· People will prefer to rent, rather than to buy

· Investors are unlikely to ‘buy-to-let’

· Rents will tend rise faster than prices

Conclusion: No turnaround in China’s residential prices likely soon.

When the Chinese housing market was roaring ahead, rents moved up much less than prices. With the current market downturn, rents have dropped together with property prices (though slightly less). Gross rental yields now average a modest 4.42%.

Why are Chinese rental yields so low? Prices in China surged till September 2007, and then paused – and have not substantially dropped since then, according to CREIS, which uses a hedonic methodology (eHomeday arrives at closely similar results).

How far do gross rental yields need to rise in China? China’s gross rental yields of 4.42% are lower than would be expected in a developing economy. They are low, also, compared to other economies with similar income-per-capita.

We conclude that until one of two events occurs – more residential price falls, or substantial increases in rents – residential prices are unlikely to begin a sustained recovery in urban China.

The Chinese government has taken steps to support the market, such as temporarily suspending the business tax for residential property transfers, and encouraging cities to permit foreign purchases. China’s economy remains relatively strong, because of prompt government measures. Consumption spending is strong, restaurants are full, optimism remains high.

However, gross rental yields are still too low. Therefore, it is unlikely that there will be a convincing upturn in Chinese residential prices soon, the Global Property Guide believes.

Description:

The Global Property Guide is an on-line property research house.

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On-line newspapers, magazines, sites, etc wishing to use material from this press release MUST provide a clickable link to www.globalpropertyguide.com Sites and newspapers found not to be providing a link to us will be removed from our press list.

Requests for Comments:

Requests for comments are best made by telephone to +(63) 917 321 7073. UK-based callers should telephone before lunchtime. Our local time is Hong Kong time, i.e., standard time + 8.00

Publisher and Strategist:

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Phone: (+632) 867 4220

Cell: (+63) 917 321 7073

Email: editor@globalpropertyguide.com

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Global Property Guide

http://www.globalpropertyguide.com

5F Electra House Building

115-117 Esteban Street

Legaspi Village, Makati City

Philippines 1229

info@globalpropertyguide.com

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www.RHF-International.net Ville: Ceret Near By Town: Prats-de-Mollo Price: EUR 689000 Baths: 3 Habitable m2: 210 Terrain m2: 780000 Exposition: Sud Tax Fonciere: 300 Status: For Sale Ref ID: 2648 www.RHF-International.com

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Santiago and Concepción are attractive for residential property investors, Viña Del Mar less so, says the Global Property Guide

There are surprisingly large differences between returns on residential property in Chile’s main cities. The Global Property Guide (yguide.com”>http://www.globalpropertyguide.com), the research site for residential property, released today the results of research into rentals in major cities of Chile. It revealed that:
• Apartments in prime areas of Santiago have excellent average rental yields of 8.16%.
• Apartments in the city of Viña Del Mar yield only half as much, on average, with gross rental yields of around 4.31% only.

The rental yield is the annual rental income on a property, as a percentage of today’s property purchase price. This is what a landlord can expect as return to his investment. The rental yield is one useful yardstick of whether property is over-valued or under-valued

The high yields on apartments in prime areas of Santiago – Las Condes, Providencia, and Vitacura – suggest that these Santiago areas make good residential property investments.
Apartments in prime areas of Santiago cost on average US$ 98,520 for a 60 square meter apartment, according to the Global Property Guide’s research, versus US$ 87,480 for the same sized property in Viña Del Mar. However, 120 square meter apartments are more expensive in Viña Del Mar than in Santiago.

The result? Looking across the different sizes, prices in the two cities are more or less the same, on average.

Though apartments in Santiago and Viña del Mar cost around the same, per square meter, yet Santiago apartments produce twice as good rental returns – i.e., rents for the same sized apartment in Santiago are nearly twice as high. This means that Santiago is much more attractive as a residential investment.

In the southern city of Concepción, 120 square meter apartments have excellent gross rental yields of 9.04% – also, an excellent level of rental yields, making Concepción a very attractive investment.

Why consider rental yields? Some investors in residential property may ignore rental returns, being more concerned with capital gains.

Yet even they would do well to consider rental yields. The rental yield, or price/rent ratio, is similar to the price/earnings ratio in the stock market. As in the stock market, property investments with high rental yields tend to perform better, and have higher capital gains, in the long-term.

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Extensive Report – http://www.globalpropertyguide.com/Latin-America/Chile/Rental-Yields

Description:
The Global Property Guide is an on-line property research house.

Terms of Use:
On-line newspapers, magazines, sites, etc wishing to use material from this press release MUST provide a clickable link to www.globalpropertyguide.com. Sites and newspapers found not to be providing a link to us will be removed from our press list.

Publisher and Strategist:
Matthew Montagu-Pollock
Phone: (+632) 867 4220
Cell: (+63) 917 321 7073
Email: editor@globalpropertyguide.com

Address:
Global Property Guide
http://www.globalpropertyguide.com
5F Electra House Building
115-117 Esteban Street
Legaspi Village, Makati City
Philippines 1229
info@globalpropertyguide.com

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to name a few. I have no doubt that this legislation was heavily influenced by lobbyists from huge food producers. This legislation is so broad based that technically someone with a little backyard garden could get fined and have their property siezed. It will effect anyone who produces food even if they do not sell but only consume it. It will literally put all independent farmers and food producers out of business due to the huge amounts of money it will take to conform to factory …

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