Prop­erty mar­ket in big­gest ever bub­ble, says China’s rich­est man

The Sun (Malaysia) - - SUNBIZ -

BEI­JING: China’s rich­est man, real es­tate mag­nate Wang Jian­lin, has warned the coun­try’s prop­erty mar­ket is the “big­gest bub­ble in his­tory” – the lat­est alarm bell to be sounded on the world’s sec­ond largest econ­omy.

Wang, the owner of real es­tate and en­ter­tain­ment con­glom­er­ate Wanda, said prop­erty prices con­tinue to rise in the coun­try’s big cities but fall in smaller ones sad­dled with huge in­ven­to­ries of un­sold new homes.

“I don’t see a good so­lu­tion to this prob­lem,” Wang, whose group owns more than 200 malls, shop­ping com­plexes and lux­ury ho­tels across China, told CNN.

“The govern­ment has come up with all sorts of mea­sures – lim­it­ing pur­chase or credit – but none have worked.”

Ur­ban­i­sa­tion and prop­erty de­vel­op­ment have fu­elled China’s econ­omy, the world’s sec­ond largest and a vi­tal driver of global growth.

China’s long prop­erty boom, driven by credit and govern­ment spend­ing, made for­tunes for many own­ers as new districts mush­roomed across the coun­try.

But growth has hit the dol­drums in the last two years, with new buy­ers priced out de­spite govern­ment bor­row­ing re­stric­tions rein­ing in soar­ing costs.

Many more pe­riph­eral cities have be­come “ghost towns” full of empty and un­sold res­i­den­tial prop­erty, even while in the larger me­trop­o­lises prop­erty prices sky­rocket.

Tiny apart­ments with no run­ning water or toi­lets lo­cated in Bei­jing’s good school districts some­times sell for prices com­pa­ra­ble with prop­er­ties in Mediter­ranean tax haven Monaco.

The stum­bling prop­erty mar­ket, com­bined with a slug­gish man­u­fac­tur­ing sec­tor and mount­ing debt, has dragged on growth, which last year came in at its slow­est rate for a quar­ter of a cen­tury.

Con­cerns about China’s growing debt moun­tain led a global cen­tral bank watch­dog to ear­lier this month is­sue a warn­ing that the coun­try’s bank­ing sec­tor is fac­ing an im­mi­nent cri­sis. – AFP

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