Real estate in China

Real estate in China is developed and managed by public, private, and state-owned red chip enterprises. In the years leading up to the 2008 financial crisis, the real estate sector in China was growing so rapidly that the government implemented a series of policies - including raising the required downpayment for some property purchases, and five 2007 interest rate increases - due to concerns of overheating. But after the crisis hit, these policies were quickly eliminated, and in some cases tightened. Beijing also launched a massive stimulus package to boost growth, and much of the stimulus wound up flowing into the property market and driving prices upward, resulting in investors increasingly looking abroad.[1] By late 2014, the IMF warned that a real estate oversupply problem had arisen that threatened to negatively impact the economy, particularly in 2nd and 3rd tier cities.[2] As of 2015 the market was experiencing low growth and the central government had eased[3] prior measures to tighten interest rates, increase deposits and impose restrictions.[4] By early 2016, the Chinese government introduced a series of measures to increase property purchases, including lower taxes on home sales, limiting land sales for new development projects, and the third in a series of mortgage down payment reductions.[5]

History

As of 2010, China's real estate market is the largest in the world,[6][7] comprising about 20% of the Economy of China.[3]

Property bubble

An empty corridor in the mostly vacant New South China Mall.

The Chinese property bubble was a real estate bubble in residential and/or commercial real estate in China. The phenomenon has seen average housing prices in the country triple from 2005 to 2009, possibly driven by both government policies and Chinese cultural attitudes.[8][9]

Growth of the housing bubble ended in late 2011 when housing prices began to fall,[10][11] following policies responding to complaints that members of the middle-class were unable to afford homes in large cities.[11] The deflation of the property bubble is seen as one of the primary causes for China's declining economic growth in 2012.[11]

2011 estimates by property analysts state that there are some 64 million empty properties and apartments in China and that housing development in China is massively oversupplied and overvalued, and is a bubble waiting to burst with serious consequences in the future.[12] The BBC cites Ordos in Inner Mongolia as the largest ghost town in China, full of empty shopping malls and apartment complexes.[13] A large, and largely uninhabited urban real estate development has been constructed 25 km from Dongsheng District in the Kangbashi New Area. Intended to house a million people, it remains largely uninhabited.[14][15] Intended to have 300,000 residents by 2010, government figures stated it had 28,000.[16]

Welfare housing system, parallel dynamics, and allegations of corruption

As of 2010, China has officially ordered an end to its welfare housing system; however, according to China Youth Daily, a parallel housing market continues to exist.[17][18] Government agencies continue to pay less than 20% of market value for real estate, and many officials purportedly misappropriate renovation and housing reform funds for personal gain.[19][20]

Companies

Name Type1 Headquarters2 Total assets3 Market cap3
Agile Property Public China Zhongshan, Guangdong N/A US$4.7 billion (2010)
China Aoyuan Property Public China Guangzhou, Guangdong N/A US$399 million (2010)
China Merchants Property State-owned China Shenzhen, Guangdong N/A US$4.4 billion (2010)
China Overseas Land and Investment Limited State-owned Hong Kong Hong Kong N/A US$17.8 billion (2010)
China Properties Group Public Hong Kong Hong Kong N/A US$541 million (2010)
China Resources Land State-owned Hong Kong Hong Kong N/A US$10.7 billion (2010)
China Vanke Public China Shenzhen, Guangdong N/A US$15 billion (2010)
Country Garden Public China Foshan, Guangdong N/A US$5.8 billion (2010)
Evergrande Real Estate Group Public China Guangzhou, Guangdong N/A US$773 million (2010)
Financial Street Holding State-owned China Beijing N/A US$3.9 billion (2010)
Franshion Properties State-owned Hong Kong Hong Kong N/A US$2.9 billion (2010)
Glorious Property Holdings Public China Shanghai N/A US$3 billion (2010)
Henderson China Holdings Ltd. N/A N/A N/A N/A
Hopson Development Public China Guangzhou, Guangdong N/A US$2.5 billion (2010)
K. Wah International Public Hong Kong Hong Kong N/A US$901 million (2010)
KWG Property Public China Guangzhou, Guangdong N/A US$1.8 billion (2010)
New World China Land Public Hong Kong Hong Kong N/A US$2.1 billion (2010)
Poly (Hong Kong) Investments State-owned Hong Kong Hong Kong N/A US$3.7 billion (2010)
Poly Real Estate State-owned China Guangzhou, Guangdong N/A US$10.6 billion (2010)
R&F Properties Public China Guangzhou, Guangdong N/A US$5.2 billion (2010)
SOHO China Public China Beijing US$4.7 billion (2009)[21] US$2.9 billion (2010)
Shanghai Forte Land Public China Shanghai N/A US$760 million (2010)
Shimao Property Public China Shanghai N/A US$6.2 billion (2010)
Shui On Land Public China Shanghai N/A US$2.6 billion (2010)
Sino-Ocean Land State-owned China Beijing N/A US$5.2 billion (2010)
Sunac China Public China Tianjin N/A US$1.3 billion (2010)
Xinyuan Real Estate Public China Beijing US$881 million (2009)[22] US$314 million (2010)[23]
Yuexiu Property State-owned Hong Kong Hong Kong N/A US$1.9 billion (2010)
Legend
1 Some state-owned entities are also publicly traded as red chip stocks
2 De facto location
3 United States dollars

See also

General:

References

  1. ↑ Strub, Doug (December 4, 2015). "Buying a Slice of Security: Chinese investors look to US real estate for stability, but must work within strict legal barriers". Business Now.
  2. ↑ "Real Estate Oversupply Becoming Bigger Problem For China". Forbes. Retrieved 2016-02-22.
  3. 1 2 Neil Gough (June 11, 2015). "Idle Home Builders Hold China’s Economy Back". The New York Times. By some economists’ estimates, real estate and related industries account for more than 20 percent of China’s gross domestic product
  4. ↑ http://www.businessspectator.com.au/bs.nsf/Article/Dont-bet-the-house-on-China-pd20100504-54SYA?OpenDocument&src=sph
  5. ↑ "China Lowers Taxes, Blocks Land Sales in Attempt to Boost Housing Markets". Mingtiandi. Retrieved 2016-02-22.
  6. ↑ Heffernan, Shayne (2010-03-03). "China, The World's Largest Real Estate Market". Ebeling Heffernan. Retrieved 2010-03-18.
  7. ↑ Packard, Simon (2010-03-03). "China Overtakes U.S. in Attracting Most Property Investment". Bloomberg. Retrieved 2010-03-18.
  8. ↑ Chovanec, Patrick (2009-06-08). "China's Real Estate Riddle". Far East Economic Review. Retrieved 13 March 2010.
  9. ↑ Medium (2015-01-04). "Shanghai Real Estate Trends 2015". Medium Inc. Retrieved 6 January 2015.
  10. ↑ Bradsher, Keith (2012-06-10). "Selling Abroad, China Eases Slump at Home". New York Times. Retrieved 11 June 2012. the popping of China’s real estate bubble over the past year depressed demand for steel, cement and other materials
  11. 1 2 3 Bradsher, Keith (2012-06-09). "Affirming Slowdown, China Reports Second Month of Scant Economic Growth". New York Times. Retrieved 11 June 2012. China’s leaders deliberately popped a real estate bubble last summer because of concerns that middle-class families had been priced out of homeownership in many cities
  12. ↑ China's Ghost Cities. Dateline SBS. Retrieved 17 August 2012.
  13. ↑ "Ordos: The biggest ghost town in China". BBC. 17 March 2012. Retrieved 17 August 2012.
  14. ↑ "Ordos, China: A Modern Ghost Town". Time. 25 March 2010. Retrieved 17 August 2012.
  15. ↑ Gus Lubin (13 June 2011). "NEW SATELLITE PICTURES OF CHINA'S GHOST CITIES". Business Insider. Retrieved 17 August 2012.
  16. ↑ Barboza, David (19 October 2012). "A New Chinese City, With Everything but People". New York Times.
  17. ↑ Bishop, Bill (2010-04-30). "China State Media On Corruption And Cooling Off The Real Estate Market". Sinocism. Retrieved 2010-05-03.
  18. ↑ Custer, C. (2010-04-29). "State Media Blames Housing Crisis on Corrupt Government". ChinaGeeks. Retrieved 2010-05-03.
  19. ↑ Bishop, Bill (2010-05-02). "Corruption In Chinese Real Estate". Sinocism (Forbes). Retrieved 2010-05-03.
  20. ↑ Yuhang, Xie (2010-04-02). 解百姓住房难必先除权力自肥. China Youth Daily (in Chinese). Retrieved 2010-05-03.
  21. ↑ "2009 Q4 Financial Report" (PDF). SOHO China. 2010-03-11. p. 4. Retrieved 2010-03-18.
  22. ↑ "2009 Q4 Financial Report". Xinyuan Real Estate. 2010-02-11. p. 13. Retrieved 2010-03-18.
  23. ↑ "Xinyuan Real Estate Co., Ltd. (ADR) (Public, NYSE:XIN)". Google Finance. 2010-03-18. Retrieved 2010-03-18.

Further reading

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