Best of the Week
Most Popular
1.London House Prices Bubble, Debt Slavery, Crimea 2.0 - Russia Ukraine Annexation - Nadeem_Walayat
2. Gold And Silver – 2014 Coud Be A Yawner; Be Prepared For A Surprise - Michael_Noonan
3.Sheffield, Rotherham Roma Benefits Plague, Ch5 Documentary Gypsies on Benefits & Proud - Nadeem_Walayat
4.Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - Jim_Willie_CB
5.Don't Miss the Boat on Big Biotech Catalysts: Keith Markey - Keith Markey
6.Gold Prices 2014: Do What Goldman Does, Not What It Says - David Zeiler
7.Bitcoin Price Strong Appreciation to Be Followed by Declines? - Mike_McAra
8.Gold Preparing to Launch as U.S. Dollar Drops to Key Support - Jason_Hamlin
9.Doctor Doom on the Fiat Money Empire Coming Financial Crisis - Andrew_McKillop
10.The Real Purpose Of QE - It’s Not Employment - Darryl_R_Schoon
Last 72 Hrs
What Will December 31, 2014 Financial Headlines Look Like? - 23rd Apr 14
Why Gasoline Prices are Surging Again - 22nd Apr 14
Cold War 2.0 - 22nd Apr 14
The JIS – Junk Ideology Syndrome - 22nd Apr 14
How to Avoid Losing All Your Money - 22nd Apr 14
Silver Up, Stocks S&P Down - 22nd Apr 14
U.S. Mainstream Media Propaganda Setting the Stage for War With Pakistan - 22nd Apr 14
U.S. Interest Rates are NOT Rising! - 22nd Apr 14
A Crisis vs. the REAL Crisis: Keep Your Eye on the Debt Ball - 22nd Apr 14
Bitcoin Implications of Lack of Price Action - 22nd Apr 14
Japan - The Twilight Of The Rising Sun - 22nd Apr 14
Is This What a Credit Bubble Looks Like? - 22nd Apr 14
The Dark Side Of The Silver Mining Industry - 21st Apr 14
Strong U.S. Dollar Rally Could Pull Rug From Under Gold and Silver - 21st Apr 14
Silver Feeble Rally Fails to Hold Breakout, Falling Back Towards Support - 21st Apr 14
Stock Market Smart Money – All Out or More to Go? - 21st Apr 14
Fast Rising Pump Prices Counterattack - 21st Apr 14
Extreme Climate Change And Life On This Planet - 21st Apr 14
Gold and Silver Stocks Sitting Tight - 21st Apr 14
Stock Market Minor Correction Imminent - 21st Apr 14
Gold and Silver - Counting Blessings and Tender Mercies - 20th Apr 14 - Jesse
The CIA Through The Looking-Glass - 20th Apr 14 - Stephen_Merrill
Gold And Silver - Gann, Cardinal Grand Cross, A Mousetrap, And Wrong Expectations - 20th Apr 14 - Michael Noonan
Nikkei Stock Market - Sell Japan - 20th Apr 14 - WavePatternTraders

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Why China’s Real Estate Makes Perfect Sense

Housing-Market / China Housing Market Jan 12, 2013 - 07:11 AM GMT

By: InvestmentContrarian

Housing-Market

George Leong writes: China is beginning to show renewed growth. The country is driving stimulus spending and easy monetary policy to get its economy back on track and drive consumers to spend.

And while there has been talk of an asset bubble in China’s housing market, my view is that the short-term risk is high, but there’s also excellent long-term growth potential in the Chinese housing market.


Investment in the country’s housing market surged 61.7% from January to November, according to the National Bureau of Statistics in China.

The conditions bode well for the country’s housing market. Consider that there are over 300 million middle-class consumers in China, and as a group, they are hungry for a lifestyle like we have in the West. Real estate investments are a key goal for the Chinese.

Standard & Poor’s analysts believe the housing market in China is stabilizing with buyers returning while home prices are stabilizing.

Moreover, in an ironic twist at a time when California’s housing market is struggling, the state’s California Public Employees’ Retirement System (CalPers), a pension fund, announced it would be investing about $530 million in two new China real estate funds managed by ARA Asset Management, which is positive longer-term.

To play China’s housing market, you can take the more conservative approach and buy the Guggenheim China Real Estate (NYSEArca/TAO) exchange-traded fund (ETF) with a year-to-date return of 58.8% as of December 30, 2012. The fund holds mainly large value-oriented Chinese real state stocks.


Chart courtesy of www.StockCharts.com

To take a more speculative and potentially higher return opportunity, an emerging small-cap Chinese real estate company that I like longer-term is Xinyuan Real Estate Co., Ltd. (NYSE/XIN), which has a current share price of $3.36 and a market cap of $242 million.

Xinyuan is approaching its 52-week high of $3.95, set on April 3, 2012, and has outperformed the S&P 500 over the past 52 weeks.


Chart courtesy of www.StockCharts.com

Xinyuan buys land and develops large-scale, high-quality residential real estate projects that are targeted toward the growing middle class in China’s tier II cities. The company looks for cities that are large and growing, with developed urban areas and an established housing market.

Targeted cities have above-average gross domestic product (GDP) growth and population growth. These cities currently comprise strategically selected tier II cities, including Hefei, Jinan, Kunshan, Suzhou, Zhengzhou, Chengdu, and Xuzhou. The combined population of these cities is over 34.5 million people, according to Xinyuan.

Projects include multi-layer apartment buildings, sub-high-rise apartment buildings, high-rise apartment buildings, retail outlets, leisure and health facilities, kindergartens, and schools.

And in perhaps a test of the U.S. housing market, Xinyuan acquired a development site in New York City for $54.2 million via its U.S. development unit, XIN Development Group International.

Annual sales grew sequentially in each year over the past nine years. Sales grew from $12.8 million in 2002 to nearly $688 million in 2011. Xinyuan has been profitable in seven of the last 10 years, including increases in the last three years.

So, while housing may still be relatively cheap in Florida, there are also unique opportunities in China.

But be advised that any stocks mentioned are meant only for illustrative purposes and should not be construed as a recommendation.

Source: http://www.investmentcontrarians.com/real-estate/why-chinas-real-estate-makes-perfect-sense/1221/

By George Leong, BA, B. Comm.
www.investmentcontrarians.com

Investment Contrarians is our daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”

George Leong, B. Comm. is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services. See George Leong Article Archives

Copyright © 2013 Investment Contrarians- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Investment Contrarians Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014