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

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