When the wealthiest industrialists and retailers start to sell off property at prices 30% less than those expected in 2013, you can be sure that there’s trouble brewing in the real estate sector. This is exactly what has happened in China during the first few months of 2014 amid speculation that the country’s property bubble has burst in a big way. Walmart will be closing its Zhaohui store in Hangzhou, the capital of Zhejiang province on April 23 and Asia’s richest man, Li Ka-shing has recently sold a landmark Beijing property, fuelling fears that China’s property boom is over.
However, the main cause for concern is coming from the residential real estate sector. Housing investment is the main driver of China’s economy with property-sector loans accounting for one third of total lending in the country – equal to USD380 billion in 2013. A slowdown in the property market would signal the collapse of many developers potentially unable to repay banks and retail investors on highly leveraged housing projects.
The ripple effect of a decline in the property sector would course tsunami-like throughout Chinese society. Due to restrictions set by the Chinese Government, citizens are unable to invest in much …read more
Source: IPIN Live