1998). In 1999, Shenzhen was only one of six cities in the whole of China that saw a profit within the real estate sector (Zhang 2001). 2.2 Knowledge Gap

Yet, even with so much information, there are gaps within the research. There a very few studies conducted within the past few years. Most around the beginning of the new millennium; "However, the literature on contemporary Chinese housing focuses on the process of housing reform, while little attention has been paid to the distorted behavior and uncertainty in the Chinese housing market," (Zhang 2001:162). Additionally, the issue of foreign investment has been explored, but not as a driving factor and in comparison to other cities where less foreign investment is present.

2.3 Objectives

Thus, it is the objective of this research to fill in those research gaps. The main objectives include an overview of the recent development in real estate markets in Shenzhen and Shanghai for the past ten years, and a discussion of the problems of the real estate market in these two areas using an economic approach, primarily being the instability of the real estate market. Such objectives will allow the research to then recommend ways for a better development of the real estate market in these two areas.

3. Research Hypothesis

Can China's real estate market survive without foreign investment? Most would say no. This research hypothesizes that it is the foreign investment in areas like Shenzhen that have driven the market, and that such investment in lieu of an experienced regulation of the market, have also contributed to its instability. By comparing Shenzhen to Beijing, where there is less foreign investment and more government control, this research aims to show exactly the impact of foreign investment on the Chinese real estate market.

4. Data and Methodology

4.1 Study Area

The study area will consist of both Beijing and Shenzhen. It will involve houses owned by private individuals, rather than government owned community housing. Exploring these commodity housing is the only way to explore the real estate market, for government control of community housing dilutes the role of the market itself. Additionally, the monetary amount of foreign investment flowing into real estate will...

This will then be compared and analyzed through regression analysis to the amount of cash in the real estate market that flows in from abroad.
5. Potential Results

As stated in the hypothesis, this research posits that the more foreign investment is in the area, the more value the area holds in terms on real estate. Additionally, the presence of foreign investment will probably be seen to complicate the market beyond its capabilities which are hindered through lack of experience. This would then create higher levels of instability within the market as well.

6. Practical Implications

Understanding the nature of foreign investment in the Chinese real estate market can help provide the necessary tools and strategies to help the government better regulate it and calm the market down. With prices being so high and unreliable, homeownership in Shenzhen for most Chinese who work and live there is impossible. By stabilizing the market through more thorough knowledge of real estate development and practice, more opportunities for local Chinese will come about.