Friday, December 02, 2011

Property bubble in China

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5 comments:

Tan Kin Lian said...

Many of the comments by the ordinary people and by the social expert also apply to Singapore.

December 02, 2011 7:09 AM
Weng Mao Fa said...

It had happened in SINGAPROE. Early 1990s, Woodland St 41 (now American Int'l School) was look like the video clip. Grass growing tall around the long completed HDB flat. No SGrean wish to stay there at $40k (4-Room), 120k(6-Room).

It had happened in JB & Thailand after 1997.

December 02, 2011 7:35 AM
Chee Ming said...

The situation in China will get worse and the bubble won't burst, at least on a short term basis.

China Central government wants to develop the country at the local level and the local governments are more than happy to receive the free money from Central. To get the free money from Central government, they (local governments) engage in acts (like collaborate with real estate developers, borrowing heavily from banks, land grabbing from locals) that are dangerous to the local government's fiscal situation and society integrity. Local governments won't stop at the moment because of Central government's policy of growth. That's not the worst, the worst part is the Central government's stability above all and local governor don't dare to report any mistake to Central government as that action will jeopardize their career.

So we can expect a soft landing, at least, of China's economy in the mid-term.

December 02, 2011 1:31 PM
yujuan said...

We attended the annual Investor Day by SGX two Saturdays ago, one invited speaker came up with a figure of 70 million unoccupied property units in China that were sold but left vacant by owners.
The Chinese Govt has now switched economic strategy, away from property construction and a contract manufacturing base to one of high value IT base.
So let's visualize a very possible scenario.
The Govt imposes a property tax across the country, then waits for the property bubble to burst, property values would then plunge to 70 to 80% of its former bloated value.
The helpless investors rush for the exit, but nobody wants to buy over their expensive properties. Their properties continue to languish in ghost towns and dilapidated conditions.
Then the Govt moves in for the kill by mopping up their units in a fire sale, repackage them into low cost housing units and offer them to the poor and to those who miss out in the previous boom, and even emerge with making a profit at the end of the exercise, and even emerge victorious in addressing the volatile social divide between the haves and the have nots. So, snaring 2 birds with one arrow.
If the bubble is pricked in China, would Singapore follow also?
One thing for sure, our GLCs who are involved in Chinese property development would be hit too, just as hard.

December 02, 2011 9:23 PM
Solomon said...

I heard this type of news last year in one of the cities in Shenzhen. The residents there said their city was a ghost town for a few years, then the population started to pick up and now they have traffic nightmare during rush hours everyday.

China going to suffer from this kind of propaganda from time to time. The speculators and rating agencies who have failed to destabilise Europe and Euro for the last 2 years are now shifting their attentions to Asia. Maybe it is time for Asian Central Banks to impose tax or trading limit on those speculators.

Chinese Government should be able to crush these speculators. My fear is other less stable Asian economies.

The moment rating agency downgraded 15 major banks, the central banks made funds available to their banks and stock markets around The World bounced. I do not think the two events were conincident.

December 03, 2011 1:53 PM

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