Real Estate

Many of the entrepreneurs that today rank as China’s richest real estate developers made their early money from selling apartments to the country’s growing middle class. Focusing on apartments and residential property made sense: residential projects generated cash quickly for then-young businesses that didn’t have much financial staying power when the government first opened up the industry more than a decade ago.

Yet as successful companies have built up their resources and even gone public, they are increasingly looking to make longer-term investments in commercial property such as office buildings and malls that can generate long-term income from rents. “A lot of big local developers have emerged in the last five years or so, and they want to build a stand-alone portfolio of office buildings and malls,” Steven McCord, associate director of research at Jones Lang LaSalle said in a meeting of the Shanghai Foreign Correspondents Club on Thursday.

China’s housing market hasn’t yet turned into a full-blown real estate bubble, but the government needs to work to limit further price increases or face that risk, an executive with a leading property research company said.

“We’re only 20% of the way” to a full-blown bubble, said Robert Fong, director of international product and business development at Nasdaq-listed, Shanghai-based real estate consultancy China Real Estate Information. “ There is still time to head off that kind of a situation.”

“What really is the key factor going forward is that the rate of increase of housing prices needs to be capped,” Fong said during a discussion at a meeting of the Shanghai Foreign Correspondents Club last Thursday.

As the Chinese real estate industry is soaring up, China World Trade Center Tower III (located in Beijing CBD, total investment is about 0.8 billion USD) keeps pace with the times. In order to prevent the 911 disaster happened, Tower III improved the structure design to bearing the airplane attack. Some floor equipped with bullet-proof glass.

“Even if I don’t eat for the next 50 years, I still won’t be able to afford a flat in Shenzhen.” As we were stuck in traffic last Sunday in his bustling hometown, a cab driver has just identified why the Chinese property market is the world’s biggest bubble at the moment. He makes a maximum of 4,000 yuan a month, but an apartment for his wife and two children will cost about 250 times that amount. The chubby dad has given up dreams of owning his own home in this southern China metropolis that borders Hong Kong.

Prices for apartments in China are seriously out of whack. They were rising this year at the rate of 20% a month in some regions. Overall, residential real estate prices soared 68% in the first quarter of the year, compared to the corresponding period last year. In the second quarter, prices were up 12.2% from the first quarter, according to Nasdaq-listed China Housing & Land Development Inc. China is the world’s fastest appreciating property market.