Foreign Investment Flows On China's Real Estate Markets

Since 1991, China has attracted the most foreign investments comparing to other developing countries for 18 years. The real estate field has become a main field and the second largest business for attracting foreign investments. Rapid growth of China's national economy and real estate,worsen of the international real estate financial environment and the push of the appreciation of the RMB bring a lot of foreign investment into the real estate market. Foreign investment on China's real estate industry and its response to the current real estate finance become a hot issue.The foreign capital, which participated in the development and consumption of properties, can be divided into four types: foreign direct investment, non-resident institutions and individuals, foreign claims and real estate industry and foreign real estate investment fund. They came into China's market through different ways and affected our market by different operating patterns. Foreign investment promoted the development of China's real estate industry and upgraded the level of service management as well as promoting the development of the domestic real estate market. But it also increased the bubble of the real estate market and interfered the monetary policy, even increased the pressure on RMB appreciation as well as the financial system risks.In this paper, regression analysis and Granger causality have been used to test the Shanghai real estate market, which is fairly representative. Conclusions are as follows. In the long term, foreign capital has a certain impact on China's real estate market, but short-term was not significant. Overall foreign investment on China's real estate market can not affect the trend of development significantly. On this basis, combining the related foreign investments policies which has been issued in past several years and the supervision's experience of the foreign estate market, we put forward some advises on how to use foreign investment rationally. The result is that only can we make full use of variety of the financial and legal means as well as the policies and regulations, the foreign investments in the real estate market being guided effectively, which could promote the development of the real estate market.