Local developer's financing challenges are creating opportunities for international investors.

Jason Leow, deputy CEO of CapitaLand (China) Investment Co Ltd, said the number of local developers contacting CapitaLand for "cooperation" has increased rapidly this year. "There are some small developers which would like to sell their projects and some listed real estate firms that acquired a lot of land parcel last year but find it hard to develop them now due to the credit crunch."

Though international investors are eager to gain greater exposure to the Chinese property market, they continue to be cautious when conducting due diligence on potential partnership opportunities.

Leow said CapitaLand will be "very careful" in conducting mergers and acquisitions. "In a market that's now seeing a big shift from investment-orientated buying to self-use buying, we will be more careful about the location and quality of our products." Domestic developers are increasingly willing to lower land and asset prices as well as their own valuations to entice investment from international groups.

But according to Chu IP Pui, director of Kerry Development (China) Ltd, the current price for mergers and acquisitions is not "attractive enough" compared with the company's land reserve bought five years ago.

Hong Kong's Kerry Properties and Beijing Huayuan Property recently launched a new luxury residence in Beijing, with the total investment hovering around 700 million yuan. It is Kerry's first high-end residential project in Beijing.

(China Daily July 10, 2008)