Property speculators in China switch from housing to cemeteries
June 3, 2013 Leave a comment
Property speculators in China switch from housing to cemeteries
Liang Shih-huang and Staff Reporter
2013-06-02
Speculative practices surrounding property prices in China have spread from large scale housing projects to the grave, as investors increasingly eye the lucrative cemetery market, driving up market prices by nearly a hundred-fold over the past ten years.
Many insurance companies are also eying the profitable cemetery market to boost revenue, with analysts estimating that if the trend continues, in another six decades a burial plot in China will cost 100 times more than real-estate.The current asking price for a public cemetery plot in Jinan in eastern China’s Shandong province is 400,000 yuan (US$65,200), which translates into a higher average per square meter price than buying local real-estate and a sharp increase from the price of 4,000 yuan (US$650) for a twin burial plot two decades ago.
A director at an insurance asset management company said that burial plots in China’s first and second tier-cities are increasingly scarce and now that investors have entered into the market, they have jacked up the price of cemetery plots.
A industry source said that the adoption of speculative practices have also spread to Shanghai and the provinces of Hubei, Hainan, and Jiangxi, with government officials also reported to be involved in hiking up the prices.
The highly competitive cemetery market has drawn in insurers, who want a piece of the lucrative pie. Beijing-based Taikang Life, one of the largest insurance companies in China, announced that it will invest in a cemetery project in Huizhou in Guangdong province, with the company chairman Chen Dongsheng saying that the company’s mission is to cover a client’s life from “cradle to grave.”
A manager at a Shanghai-based insurance company said that insurers’ interest in the cemetery market can not be seen a surprising as the firms have previously invested heavily in nursing home services and it makes sense for them to provide plots for their customers. He added that the profits for the firms could be as high as 40%-50%.
Currently, China does not have a law that prohibits insurers from investing in the cemetery market. But as local governments both own and manage cemeteries, it is hard for insurers to purchase plots on a large scale basis.
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