Half of China’s major cities face risk of propery bubble burst

Half of China’s major cities face risk of propery bubble burst

Staff Reporter

2014-02-24

The property markets in more than half of 120 cities at prefecture level and above in China have been exposed to risks, according to a survey cited by our Chinese-language sister paper Want Daily.

The cities at risk are facing excessive property supply and extremely imbalanced economic structures.

The survey on the value of property investments in the 120 cities was carried out by Chinese property consulting firm World Union and Tongji University’s School of Property in Shanghai. Around 55 of the cities are considered fragile and highly risky for property investors.

Third and fourth-tier cities such as Ordos and Baotou in Inner Mongolia, Sanya in Hainan, Yulin in Shaanxi, Beihai in Guangxi, Huangshi in Hubei, Heilongjiang’s capital Harbin, Jiaxing in Zhejiang and Xiangyang in Hubei, as well as second-tier city Wenzhou were listed as places facing risks of a property bubble burst. Their property markets face an imbalance of supply and demand, as well as an uneven economic structure. Their economic structures are hollow and the wealth gap in these cities is huge.

Although property markets in Xiangtan and Yueyang in Hunan as well as Lianyungang in Jiangsu have been booming, they are also considered fragile due to overdevelopment caused by local major property developers. It has reduced these markets’ potential for growth, making these cities prone to high risks if they are not careful.

The disparity between property markets across China are widening and have not been limited to first, second, third, and fourth-tier cities.

 

Half of China’s major cities face risk of propery bubble burst

Staff Reporter

2014-02-24

The property markets in more than half of 120 cities at prefecture level and above in China have been exposed to risks, according to a survey cited by our Chinese-language sister paper Want Daily.

The cities at risk are facing excessive property supply and extremely imbalanced economic structures.

The survey on the value of property investments in the 120 cities was carried out by Chinese property consulting firm World Union and Tongji University’s School of Property in Shanghai. Around 55 of the cities are considered fragile and highly risky for property investors.

Third and fourth-tier cities such as Ordos and Baotou in Inner Mongolia, Sanya in Hainan, Yulin in Shaanxi, Beihai in Guangxi, Huangshi in Hubei, Heilongjiang’s capital Harbin, Jiaxing in Zhejiang and Xiangyang in Hubei, as well as second-tier city Wenzhou were listed as places facing risks of a property bubble burst. Their property markets face an imbalance of supply and demand, as well as an uneven economic structure. Their economic structures are hollow and the wealth gap in these cities is huge.

Although property markets in Xiangtan and Yueyang in Hunan as well as Lianyungang in Jiangsu have been booming, they are also considered fragile due to overdevelopment caused by local major property developers. It has reduced these markets’ potential for growth, making these cities prone to high risks if they are not careful.

The disparity between property markets across China are widening and have not been limited to first, second, third, and fourth-tier cities.

 

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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