AbstractsEconomics

The Chinese direct property market has been growing substantially since the beginning of the 1990’s. This study was conducted in order to understand what investments on this market have generated in terms of risk adjusted total returns. Data is evaluated from a perspective of modern portfolio theory. A background to the development of the property markets in Beijing and Shanghai is given. Then indices of rent and price levels on office premises in Beijing and Shanghai are analyzed. These results have been compared with similar data from the Hong Kong market. The results show that the risk adjusted returns differ substantially between the three markets during the reference period from Q1 1996 to Q1 2006. Beijing has offered a much higher return to direct investments than Shanghai and Hong Kong and to a lower risk.