After months of nail biting speculation, the Chinese government last week launched a first revaluation of its currency, the Yuan. Economists and property investors have been expecting the revaluation, which in real terms, raises existing property values overnight and those buyers who have been brave enough to put money into China are now celebrating their good fortune.

The Yuan has been widely acknowledged to be up to 40 percent undervalued, ensuring that Chinese exports and Chinese property are much cheaper than they should be. In the view of other governments, this creates an unfair trading advantage. A diplomatic row have been steadily brewing, culminating in a US threat to name China as a manipulative trading partner and impose tariffs on Chinese goods.

China last week opted to revalue the Yuan by around 2.1 percent relative to the dollar, at the same time, switching the Yuan peg from the dollar to a basket of currencies. Analysts had predicted a first revaluation of at least 10 percent – the minimum which US Senators said would be needed to deflect action against China. Whilst analysts welcomed the revaluation as a sign that China is willing to engage with, and listen to the outside world, the overriding prediction is that another, sharper revaluation must be imminent.

The slower than expected process of revaluation may prove to be something of a mistake for China. Extending the period of revaluation is tantamount to inviting international speculators to make a quick profit from the currency shift. Analysts and commentators, such as David Barboza writing in the New York Times, are now predicting a flood of investment into China as people turn a quick profit on this revaluation. This may not be ideal for China, but the news could not be better for property investors.

Speculative investment leads to the kind of inflationary pressure that China is keen to avoid. For this reason, China has strict banking controls, aimed at neutralising the money flowing into China. The way to get around this is by investing in ‘hard assets,’ with property being the most obvious investment. The property can then be sold after revaluation for a higher profit denominated in Yuan. The risk of inflation ensures that it is in China’s interest to bring the Yuan closer to its true value soon. In the meantime, the opportunity for property investors to make a swift profit remains.

7% Guaranteed in a booming market

TheMoveChannel.com currently only lists one investment opportunity in China, at a development called Hyundai Plaza, which has a 5% discount available on the remaining single units, with a higher discount for the purchase of multiple units. As well as the capital growth, investors can benefit from a guaranteed rental income of at least 7%.

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