Why China Has Recently Become A Bad Direction For Profitable Investments From Abroad
China has been widely considered as an Asian economic miracle by many – before 2020. In 2021, its political and financial problems aggravated, which has put many foreign investments in jeopardy. Below, we’re considering foreign investment enterprise crisis reasons in China in more detail.
How foreign investments in China is regulated?
China has a particular legislation piece called the Negative List, which is officially China’s foreign investment law. It prescribes, in what industries foreign investors, private and corporate, can and cannot invest and how should they do it. It is a sort of governmental incentive, which, despite its name, is aimed at bringing more foreign investments to the country. So they were growing almost every year since 1991. And they accelerated in 2018 and later after the Negative List was made milder and more attractive.
China economics crisis
And the Negative List was working well – until recent years, when Xi Jinping, using his highly autocratic regimen, turned the policy of his country to the side of becoming more Marxist. If you, as a good investor, follow the news from China, you should have noticed several very alarming signals from there:
- Jack Ma’s persecution, his replacement from his position of Alibaba’s CEO, and factual taking control of his company – that is just one loud example of many similar cases in the latest two years
- Xiaomi, Pinduoduo, ByteDance, Alibaba, Tencent, and other giant private companies in China – have forcibly donated already and pledged to donate in several upcoming years billions of US dollars to support the communist party’s regimen
- Lowering the main indexes of tech companies in China (Invesco Golden Dragon China EFT and Hang Seng Tech Index) in 2021 to 6,000 points from their peak of 11,500 points in 2020
- Chinese shares index fall from 5,100 in 2015 to 3,700 in 2021
- Chinese house prices inflation peaked 140% in 2020 compared to 100% in 2010 but that was ongoing without any real financial prerequisites for peaking
- Default of Evergrande, which was holding liabilities for $300 billion should do a much bigger boom than it was in 2008-2012, which started with the failure of the Lehman Brothers, which held a significantly lesser amount of overdue liabilities. An additional bad signal is that Evergrande’s business model is broadly copied by other developers in China and Asia, which will also lead to a much massive fall of their ‘houses of cards’ for similar reasons in the upcoming months
- The general household debt in China increased from 55% of GDP in 2019 to nearly 80% in 2021, surpassing a much milder indicator even in the US (74%), the world’s largest economy
- Finally, Mr. Xi Jinping’s focus on the so-called “common prosperity” untwines several connected crises: a possible introduction of a new personal income tax in 2022 (which is, as rumoured, planned at the 20th Congress of the Chinese Communist Party), more state control of private businesses in the biggest wings of the Chinese economy, including data, e-commerce, fintech, gaming, private tutoring, ride-sharing, social media, and video streaming.
The wide recent and future problems of China are economic, political, and COVID-connected. As for the rest: you should have heard as China closes entire cities with millions of dwellers on quarantine. The latest case in 2021 was on December 23rd with Xi'an city, which has 5.7 million people itself and 12.9 million, considering its urban and metro areas.
How a professional real estate investing company in Ukraine can help
Large volumes of disturbing information, especially the Evergrande’s default, draw millions of large and small real estate investors from this country, forcing them to seek other directions for their money (if they’re successful enough to withdraw their money from China now). If you have not yet completed investments in China, don’t! Rather, pay attention to Ukraine – this is a much safer harbour for your money.
Ukrainian capital makes the most interest in terms of ROI. The country is politically and economically stable. Speaking on average, the ROI for real estate objects that are let for rent (short-term and long-term) varies in Kyiv from 7% to 15% annually. The most appealing options today are:
- Apartments in many-story houses in the capital
- Detached homes in suburbs
- Hotel-kind income houses, with seasonal and off-seasonal rent (this type of object is only rising in Ukraine and it is decades away from being the same large as in the US or Europe, so there is much space for growth).
Our professional investment company can guide you through the entire process of investment, starting with money transfer to Ukraine, proceeding with the selection of a good object or several, and managing them on a daily basis. With our practical assistance, the investment process in Ukraine becomes easy and transparent for you.
Considering China as a profitable and risk-free destination of international investments is no longer the case. A large economic turmoil is waiting there for all investors in 2022 and at least in 2023. So pay attention to a safe harbor, which is Ukraine.
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More about DGY
DGY is a real estate investment and property management company. Our experts have an impressive experience in turning businessmen into smart real estate investors. We collect limitless opportunities throughout the world’s best real estate markets and help our clients implement the best deals. We take care of all due diligence and customize documentation while your income grows. We also provide you with property management services so you can forget about the tiresome maintenance of several objects and entrust this process to professionals.
Investment advice and recommendations
DGY is an investment company that takes care of every client and helps them become successful investors. With the help of an investment experience and a well-thought plan, we will help you examine the market, choose a strategy specifically for you or your business, and calculate future costs to start making money with real estate investment.
In order to invest in real estate, you should consider how you will run your management in Ukraine. DGY will help you eliminate all possible pitfalls at an early stage as a personal project manager will be assigned to your case. They will assist you in choosing the project according to all required objectives.
DGY Investments takes care not only of purchasing property but also renovating an existing one. With the help of a thorough plan and estimating, we will thoroughly prepare a property for sale. Our professionals evaluate an investment property and create a strategy that includes the costs for renovation, possible taxes, fluctuations on the market, etc. Therefore, our clients are able to resell the renovated properties in Ukraine with more than 15-20% profit from the initial price.
Before our clients decide to deal with real estate investing, they consult with our experts concerning details such as the necessary documents needed to purchase a property and successfully run all the processes connected to it.
Therefore, if you are eager to invest in Ukraine, it’s essential to have all the paperwork done correctly, and that’s the moment when our team of experts takes care of this step. DGY Investments helps investors buy real estate property, manage the paperwork, start preparing relevant documents for purchasing realty in Ukraine, and close the deal successfully.
Real estate investment opportunities in Ukraine
When an investor decides to invest in real estate in Ukraine, the most affordable way to attain stable passive income is through buying residential real estate. Investors can expect to receive a regular monthly payment from their tenants at a fixed monthly amount, unaffected by inflation or other unforeseen circumstances. The amount of rental income will vary depending on the size, type of property and location. For example, buying an apartment in Ukraine’s capital Kyiv is beneficial to investors due to offering a large working population, central location and affordable prices. Hence, the minimum price of renting a decent one-bedroom apartment in Shevchenkivskyi District will be around $1000 per month in 2021, followed by Pecherskyi District with a cost of $850 per month. Besides, investing in real estate in Ukraine annually brings clever investors up to 15% of yield, attracting many business people every year.
Properties for investments in Ukraine
Ukraine has a giant sector for real estate investing. Businessmen who come there all over the world often choose between investing in residential and commercial properties. The main advantage of buying property in Ukraine is the affordability of prices on the houses and apartments. For instance, if you invest in real estate in a historical district, a luxurious apartment will cost you around $85k only.
How to invest in Ukrainian Real Estate
In order to invest in Ukrainian real estate, you should take into account a list of crucial factors. The first one is to choose what kind of realty you are going to invest in: residential or commercial. It is vital as it should comply with Ukrainian real estate law. The second tip is to identify the purpose of purchase in order to make a strategy for the property. For instance, you may purchase the property for your own use or buy it for lease. The next step is to calculate the taxes and what kinds of taxes are payable during the purchase, owning, or selling. Also, to invest in real estate properly, you should keep in mind currency control rules in Ukraine to sell a property and get a higher profit.