A high-end residential community in Ding'an, South China's Hainan Province. Photo: IC

China will encourage investment by foreign capital in the tourism, elderly care and education sectors next year, a spokesman for the Ministry of Commerce (MOFCOM) said Monday.

The ministry wants foreign investors to enter "some newly developed sectors, such as rest homes, tourism and vacation properties, and properties with educational functions," Shen Danyang, spokesman for MOFCOM, said during a press conference in Beijing.

"Inviting foreign capital to join in the development of property for elderly care and tourism could add advanced experience to China's immature markets," Song Ding, director of the tourism and real estate research center of the Shenzhen-based China Development Institute, told the Global Times Monday.

It also represents a good business opportunity for foreign investors, Song said, as the markets for elderly care and tourism in China are huge.

Currently, foreign investors are mainly interested in commercial property in China, such as offices, retail space and hotels, which offer stable rent and return rates compared with other types of properties like residential developments and nursing homes, according to Wang Yuke, senior director of Beijing-based RET Property Consultants.

Wang told the Global Times Monday that there has been a rise this year in the number of Chinese commercial property projects involving foreign investors.

In Shanghai, there were 18 investment transactions totaling 16.4 billion yuan ($2.7 billion) this year, and foreign investors accounted for 86 percent of the transactions, according to data released last week by real estate consultancy Savills China.

Despite the government's encouragement, Wang noted that foreign investors might have limited interest in newly developed property sectors such as rest homes, as they are still not mature in China.

The central government is aiming to push forward construction of nursing homes to tackle the issue of China's aging population. In September this year, the Ministry of Civil Affairs announced a pilot program allowing the elderly to pay their nursing home expenses by mortgaging their homes.

This method, known as a "reverse mortgage," allows the elderly to use their homes as collateral for bank loans to pay nursing home costs, and is intended to add to the options available for elderly people who are struggling to meet care costs. The model is common in some developed countries, such as the US.

However, the pilot scheme has proved controversial with the public in China, with some arguing that it could jeopardize children's inheritance of their parents' homes, according to media reports.

Despite the newly announced plans, there is a lack of healthcare services and facilities for elderly people offered by the government, and developing these services will involve huge costs, Wang said.

Foreign investors will not be eager to take on that burden, Wang noted.

But Song of the China Development Institute said that foreign investors have some advantages in managing rest homes and vacation properties, due to their greater experience in these areas.

Currently, some Chinese developers are researching a rental and sales system for vacation properties that will allow customers to share or rent out their vacation properties, rather like the timeshare business model that is popular in the US, Song noted.

"Although it will take time to build this model, some foreign investors have advanced experience in managing it," Ding said.