FT.com / China / Economy & Trade - Fears of China property bubble
Urban property prices in 70 big and medium-sized Chinese cities rose 3.9 per cent in October from a year earlier, accelerating from September's 2.8 per cent rise, according to government figures.Price rises in top-tier markets such as Beijing and Shanghai have been much faster. Analysts say the rebound has largely been driven by an unprecedented government-led expansion of bank lending. It is also being driven by government policies, including tax breaks, low interest rates and smaller down-payment requirements. Investment in real estate development, a key driver of economic growth, rose 18.9 per cent in the first 10 months of the year on a year earlier, a marked acceleration from 17.7 per cent growth in January-September.Ms Zhang said the current speculation should be a serious warning for the industry and the general economy."In Manhattan, they have vacancy rates of 10-15 per cent and they feel like the sky is falling, but in Pudong [the central business district in Shanghai] vacancy rates are as high as 50 per cent and they are still building new skyscrapers," she said.
Urban property prices in 70 big and medium-sized Chinese cities rose 3.9 per cent in October from a year earlier, accelerating from September's 2.8 per cent rise, according to government figures.
Price rises in top-tier markets such as Beijing and Shanghai have been much faster. Analysts say the rebound has largely been driven by an unprecedented government-led expansion of bank lending. It is also being driven by government policies, including tax breaks, low interest rates and smaller down-payment requirements.
Investment in real estate development, a key driver of economic growth, rose 18.9 per cent in the first 10 months of the year on a year earlier, a marked acceleration from 17.7 per cent growth in January-September.
Ms Zhang said the current speculation should be a serious warning for the industry and the general economy.
"In Manhattan, they have vacancy rates of 10-15 per cent and they feel like the sky is falling, but in Pudong [the central business district in Shanghai] vacancy rates are as high as 50 per cent and they are still building new skyscrapers," she said.
On my street, there are a ridiculous number of real estate offices, literally one every two or three storefronts, with a dozen or so young agents sitting in each of them, mostly doing nothing, except surfing the web, chit-chatting, having a smoke. It's surreal.
Then again, what do Chinese people have to do with their savings? Real estate, the stock market, or the mattress. The Chinese stock market is temperamental to say the least, but some people are still putting there money for lack of alternatives. There is gold. And more recently there is art as investment. But real estate is definitely benefiting unnaturally and dangerously from this general lack of investment options, or so it seems to me.
And while the coastal urban areas are very different from the still poor interior of the country, this place definitely smells a lot like Tokyo circa 1987 or 88. La Chine dorme. Laisse la dormir. Quand la Chine s'éveillera, le monde tremblera.
The West largely failed to introduce Christianity to Japan and China, but they succeeded to install the Real Estate and even the Stock Market religions everywhere.
