Infection Of The Foreign Capital In Chinese Real Estate Market

Since China’s reform and opening up to outside world policy, China has made prominentachievements in attracting foreign investment, and Chinese realty market has been thesecond-most investment of foreign trader. Foreign investment are flooding the real estatemarket, it is for the following reasons, capital nature of interested first, the rapid developmentof national economy, RMB appreciation and the financial environment of international. Thistrend has reached a fevered pitch lately, a hot topic of the finance domain concentrates on howto put forward countermeasures to face the impact brought by foreign capital.Foreign investment enter into Chinese real estate market by different channels anddifferent operational modes, thus the foreign investment has different impacts on real estatemarket. This thesis summarized the three aspects of the influences. First, Chinese real estatedevelopment was promoted by foreign investment, which bring us with more opportunities forcooperation, demonstration effects and advanced investment concepts, improvements ofmanagement and administration, real estate financing channels are provided by foreigninvestment, which promotes the development of capital market. Second, there is morecompetition because of the increase of supply, and some impacts on our own real estate areunavoidable. Third, the entire market financial risks and the pressure on the currency toappreciate are increased by the massive hot money which flews into China, in the meantime,the massive hot money affects negatively the effectiveness of macro-control policies and leadsto a greater difficulties in government regulations.In this thesis, regression analysis and Granger Causality Test are used to analysis effects offoreign investment entry on the real estate market in Tianjin. The result shows that Chineseresidential property prices are increased by foreign investment, and more foreign investmenthas been attracted with the rapid development of the nonresidential real estate.Based on the successful experience of foreign investment entry management in other countries,this thesis provides several suggestions as follows：1. From the investment region aspect, government should guide foreign investors to transfer and increase their investments to real estate of second and third-tier cities, andencourage foreign investors to participate in the old city transformation of second and third-tiercities, on purpose of improving the management level and quality of the real estate companyin these regions, on the other side, diversify investments should also be encouraged.2. From the forms of forms of cooperation aspect, strengthening our direct cooperationwith foreign investors, through which, we can improve comprehensive strength of Chinese realestate companies and promote the healthy and rapid development of real estate sector.3. Our government should avoid the short-term speculation phenomenon and directlong-term investment of foreign investors, in the same time, the investment of residential realestate should be given proper limitation.