Boom or bust? Bras cost more than properties, says Chinese developer

Boom or bust? Bras cost more than properties, says Chinese developer

Staff Reporter

2013-05-27

When Peggy Yu, executive chairwoman of Chinese online retailer Dangdang, complained about expensive property prices to the chairman of Beijing-based developer Huayuan Group, Ren Zhiqiang, at a meeting held by China Entrepreneur Magazine on May 18, Ren replied by saying that bras are in fact more expensive than properties.

“A property project takes several years to complete, but how long does it take for you to make a suit of clothes?” Ren said. “A small bra may cost hundreds of yuan, so it’s much more expensive than a house, if you go by price per square meter.” Ren’s “bra theory” triggered widespread debate online, with some internet users asking Ren if he would be willing to sell his smallest house to exchange for three good bras.Financial commentator Wu Qilun said Ren is trying to deny that the real estate industry is enjoying massive profits, but the fact is that most bras cost a few dozen yuan, while all houses are expensive.

Ren said subsequently on his Weibo that the bra theory was in fact first put forward by Feng Lun, chairman of Vantone Holdings. Feng calculated that a good quality bra costs 600 yuan (US$98) and has a total surface area of just 0.02 square meters. This would amount to more than 30,000 yuan (US$4,900) per square meter — over seven times more than the average property price of 4,000 yuan (US$650) per square meter for the nation’s second- and third-tier cities. Furthermore, a bra may be used for just one year on average, while a property can be lived in for 40 years, therefore making the price of a bra about 300 times that of a property, Ren said, extrapolating from Feng’s calculations.

While conceding a degree of validity, the magazine said on its website that Ren’s remarks seemed somewhat flippant at a time when many people are worried that they cannot afford to buy a house.

Ren said he has predicted nine times over the past 10 years that property prices would rise further, and he was right every time. “I have just one reply: as long as you have the requirement, you can buy a house at any time,” Ren said in May at an event in Xiamen.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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