Shenzhen re-sale market active.

Zhuyin Property Co, an agency specialising in secondary market transactions in Shenzhen, has just launched a new property financing service called Capital Home, in a bid to provide better services to the Special Economic Zone's real estate market.

Property developers directly sell housing units to consumers, and it is in the secondary market that these units are resold.

Shenzhen has witnessed a rapid boom in its secondary real estate market in recent years. Some 3.4 million sqm of property was traded in 2002 (up 36% year-on-year), of which nearly 2 million sqm changed hands in the first half of 2003 alone, an increase of over 30%.

Transactions are expected to grow with the expanding property supply, the sale of public housing units and generally improving economic conditions.

Second-hand private housing makes up the bulk of property transactions in Shenzhen. Indeed, Shenzhen people are already quite familiar with investment and financial management.

Many families and individuals have investments in shares and bonds, buy insurance and collectible items, or simply put their money in the bank. And. for a city with a booming property market like Shenzhen, real estate is a popular area of investment.

However, real estate investment has not been developing as well as it should because it requires huge capital, a long investment cycle and professional expertise, to say nothing of the shortage of intermediary and investment risk service agencies.

Real estate investment requires professional expertise and the market is unpredictable, but there are too few experienced professional agencies around. Consequently, many investors find investing in the property market too risky. Some have even sustained losses, which naturally affects their enthusiasm.

The Capital Home scheme was jointly launched by Zhuyin Property and the Shenzhen branch of the Industrial and Commercial Bank of China, providing a sense of security to services on offer.

According to Jiang Xu, general manager of Zhuyin Property, the basic concept of this service is to help clients maintain and increase the value of their investment. The service brings into play the company's professional expertise as well as the stringent monitoring system of specialised banks to facilitate transactions.

Property deals under the scheme relate to existing property with clear property rights and good profit-making potential, says Jiang, utilising information networks to achieve low-risk capital appreciation.

Under this scheme, an investor deposits a minimum Rmb200,000 (HK$188,600) with the Industrial and Commercial Bank of China to obtain a deposit voucher to start making investments and profits. Supervision by the bank assures the safety of fund operations, while investment in existing property claims to entail low risks while promising good return.

The apparent benefit of this scheme for property sellers is that it facilitates quick recovery of money. Owners do not have to wait until their property is sold to get their money back, as Zhuyin can ask the bank to advance the payment. For property buyers, the scheme claims to allow them to buy good value property with a high performance-to-price ratio, because all housing units for sale under the scheme must have clear property rights, must be cheap and have good revaluation potential.

CEPA came into force on 1st January 2004 and Hong Kong-funded enterprises of substantial strength, as well as small and medium-sized enterprises interested in investing in China's secondary real estate market could immediately set up real estate agencies in Shenzhen - and secure a share in a potentially lucrative market.

from Maria Lou, Shenzhen Office