Reporter found after 15 days missing

After 15 days missing, the newspaper reporter has been found detained, alive, in Zhang Jiakou police office of Hebei province, CCVIC.com—the newspaper’s website—reported on Monday evening.

Guan Jian, in his fifties, an investigative reporter for China Internet Weekly, has not been seen since December 1, 2008, said Ren Pengyu, editor-in-chief of the weekly, which is governed by Chinese Academy of Science.

“Guan went to Taiyuan, the capital of Shanxi province, to report on land misuse by a local real estate company,” said Ren.

The website said Guan Jian was detained in a third province, neither Shanxi or Beijing, by the economic crime investigation department of local public security bureau.

Guan Yufei, son of the reporter, told China Daily he filed the police report on December 7 after futile search of his farther, and he was “shocked” to hear the update.

“Zhang Jiakou police refused to disclose further details about why and how long,” he said. “All they said was to bring some money and medicine for high blood pressure and heart problems.”

When asked if his father had such health issues, the son replied with a puzzled "No". He told China Daily he could not be completely relieved until his farther is released and the case is cleared.

Guan’s son said the family members, co-workers and Shanxi local police participated in attempts to find him.

“The local police obtained the surveillance tape from Taiyuan Jinjiang Inn and found five unidentified men dragged my farther into a Volkswagen Touareg and drove away around 6:00pm on December 1”, he said.

The Beijing News published four surveillance photos on its Monday newspaper.

The chief editor Ren said Guan was originally from Shanxi province and he had worked in Beijing for over two years.

“He wrote several reports previously relevant to the dark sides of social realities,” Ren said. He also said Guan has earned credit for in-depth critical reportage on social mores.

Ren said Taiyuan local authorities had been “helpful” and investigations still underway. 

Chinese fishing for U.S. foreclosures, bargain or trap?

In these tough financial times, Chinese are trying to find bargains any way they can. And there they’ve found American houses.

Grouped to bottom fish in the U.S.

Seven consecutive quarters of decline in the U.S. real estate markets appear to have created a good time for bargain-minded bottom fishers from other parts of the world. For Chinese buyers, they are trying to capitalize on the foreclosures.

As of today, about 300 Chinese residents registered a tour to the U.S. for property hopping scheduled to departure next January. “It costs almost the same to buy a three-bedroom apartment in Beijing as to buy a foreclosure in the U.S. after the financial crisis,” said Liu Jian, senior manager of Soufun.com—the organizer of this event.

“I’d like to buy one for my son,” said Xiao Hong, one of the registrants. “Just in case he gets into Harvard.” If all goes as the mother planned, the house will be empty for three years until her son gets an American college admission, hopefully, and the family be issued a visa. “I care less about money than my son’s education.”

About 20% of the registrants are middle-class parents like Xiao who will property hop for their children. However, half of the rest are investors who have been following the rise in mortgage foreclosure and hereafter the global financial crisis for over a year.

“I had been looking at U.S. land since earlier this year, because I wanted to wait for prices to drop a little further before I buy.” said Liu Xing, a mid-aged property investor who drives a BMW and dashes around fancy restaurants. “It’s about time.”

Foreclosures, bargain or trap?

A foreclosure becomes available when a homeowner cannot afford the mortgage fees on the property and is forced to give up the house to pay back what is owed. Chinese buyers are conceptually familiar with foreclosures, which have triggered and now threaten to deepen the financial crisis.

Liu Xing, owner of several properties in Beijing, said the house price slump in America had hastened his dream to be a landlord in the U.S. “I visited Holland, Australia and England before.” he said, “But I like the U.S. better. Not to mention the country is now on sale!”

Indeed, U.S. home prices have dropped straight since April 2007 and fell 1.8% in the third quarter of 2008 from the previous quarter, the largest decline in 17-year history, according to the Federal Housing Finance Agency (See chart below).

U.S. House Prices Index (Jan 06—Sep 08) 

 

Source: http://www.ofheo.gov/media/hpi/monthlyindex_to_1991.xls

The Federal Reserve Board chairman Ben Bernanke said Thursday that the number of foreclosed property in the U.S. was increasing and the government had to take urgent measures to bailout underwater mortgages.

Is it a good timing for Chinese investors snapping up what many see as bargains and entering the U.S. real estate market?

Not necessarily.

Be aware of policy risk and cost-related issues that may arise with cross-border home shopping.

“Most people in this trip are ignorant of the policies and the costs involved in buying a foreclosure in the states.” the organizer Liu Jian said, “This is more like a study tour, trying to help them do some homework.”

Before make any move, it’s worth doing some homework. Sunny Sun, a senior real estate specialist based in Los Angeles, said that buying a house in the U.S. is a math game of costs. Property taxes, plus maintenance and insurance on a house could easily add up to 5% of the home’s value each year. And a mortgage for thirty years at 5%, the rate Mr. Bernanke just announced Thursday, could cost another 5%.

“For those who are willing to bottom fish a foreclosure now, and leave it empty for three years until their kids get into college,” Sun adds, “they will probably better off putting money in China and eating lobsters everyday instead.”

Look before you leap

Without preemptive research, these middle-class Chinese investors will be like a bull in a China shop—not in China though—ending up buying foreclosures with tax liens or other outstanding expenses, which they don’t expect at all.

“If their eyes are set long term, investing in a foreclosure is probably a right thing to do now,” said Yi Xianrong, director of Finance Research Institute at Chinese Academy of Social Sciences, a top government think tank. “If they’re going for a quick flip, it’s not going to work.”

While U.S. foreclosures can offer Chinese long-term investors an incredible deal as the banks sell them at prices 10-50% less than the market price, foreclosed houses are commonly located in less desired neighborhoods, scarcely populated areas and sometimes legally risky.

Wang Hongxin, the director of Real Estate Research Institute of Beijing Normal University, said that Chinese are used to live in a dense community. They would not imagine what the life is like if living in a far foreclosure and driving half an hour just for a bag of potato.

Wang also advised that Chinese buyers would be much safer to buy a foreclosure long enough after the legal process is cleared. “Right now, foreclosed houses come out day by day. But it may take months before the title is resolved and the property can be sold on a safe base.”

“Whether you pay cash or finance your property, which is hard for a non permanent resident alien of the U.S.,” Wang adds, “the best way to buy is to find a licensed real estate agent. They may direct you from procedures to better values.”

Moreover, buying a foreclosure will not help obtain a visa as many Chinese people would assume, the U.S. embassy confirms.

Back to 2006 when China’s real estate market was at peak, many overseas investors flocked to Beijing and Shanghai to scoop up apartments. Now the domestic market enters into winter, investors lose their confidence at home turf. Driven by a belief that it’s the best time to take advantage of strong RMB and bottom fish in the U.S. property, Liu Xing and many other tour registrants are rolling up their sleeves.

“With the economic prosperity and the rise of middle class over the past 30 years of reform and opening up, many Chinese people are financially prepared to fish foreign assets and properties.” said professor Wang Hongxin, “That doesn’t mean they are equally prepared in terms of knowledge in foreign investment.”

With credit crunch and a confirmed recession, America is no longer refusing to court foreign money to keep the economy going. Under such circumstances, chances favor the prepared mind.

Finally, bargain or trap, it’s in your hand.