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- April 2014 Vol.6 No.4

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Tier I vs tier II: In the game of tiers, second-tier Chinese cities have much to offer property investors

by Terence Loh

1 Institutional foreign capital has been investing in China real estate for more than 10 years and one of the perennial debates has been over city selection: First-tier versus second-tier, which is better? It is possible to invest in, successfully exit and generate attractive returns from real estate projects in both first- and second-tier cities. And while there are many benefits of investing in first-tier cities — such as liquidity, depth of market and greater transparency — over the years, first-tier cities have also become crowded with foreign and local investors bidding for similar projects. For investors who have the ability to source real estate opportunities directly in second-tier cities, the overall market dynamics are favourable compared with the average transaction in a first-tier city. For instance, second-tier cities, such as provincial capitals and other large, fast-growing cities, offer the fo

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