Many outside experts have speculated that a bubble is brewing in China’s property market. Now a major insider is expressing the same thought.
Zhang Xin, chief executive of Soho China, one of the country’s most successful privately-owned real estate developers, says the government’s stimulus program is creating a bubble.
“Real estate prices should only go up because people want to actually use the space, but at the moment we can see more and more empty buildings across the whole country and in every real estate segment,” Zhang told the Financial Times.
Property prices in 70 of China’s biggest cities gained 3.9 percent in October from a year earlier, accelerating from September’s 2.8 per cent increase, according to official data.
Zhang says Shanghai is in worse shape than Manhattan.
“In Manhattan, they have vacancy rates of 10 to 15 percent, and they feel like the sky is falling,” she told the FT.
“But in Pudong (Shanghai’s main business area), vacancy rates are as high as 50 percent, and they are still building new skyscrapers.”
Not everyone agrees with Zhang.
People mistakenly use Shanghai and Beijing as proxies for the whole country, Gary Huffbauer, senior fellow at the Peterson Institute for International Economics, told National Public Radio.
Real estate prices have surged 20 to 30 percent in those cities since March.
But, he says, “A fair index of the whole country is probably an increase of 5 percent. That doesn't sound so bubbly.”
© 2017 Newsmax. All rights reserved.