China’s real estate boom remains “unabated” and has even picked up since the government’s announcement of cooling measures, said Jim Chanos, the hedge-fund manager who earlier predicted a market crash in 2010.
Home prices in 70 cities jumped 7.7 percent last month from the previous year, even after the government suspended mortgages for third-home buyers and vowed to introduce a real estate tax, while the sales volume jumped 14.5 percent.
“A lot of regulations in China, they are designed to be skirted,” said Mr. Chanos in an interview. “The boom has continued to be unabated. It’s actually even picked up a little bit recently towards the end of year.”
He reiterated that the country is on a “treadmill to hell” due to its reliance on real estate development for economic growth. Millions of flats in the country are still empty, as speculators dominate the market, he said, describing China’s real estate bubble as “Dubai times 1,000”.
While the year-on-year advance in November real estate prices was the slowest in a year, values increased for an 18th consecutive month, according to government data.
Mr. Chanos, who was one of the first investors to predict the 2001 collapse of Houston-based energy firm Enron Corp, said some Chinese developers are getting more leveraged and are taking more money from international investors, providing hedge funds with many opportunities.
“They all look very interesting from a short-sellers perspective,” said Mr. Chanos, who founded Kynikos Associates LP. “The Western investor is the one who’s going to end up holding the real estate bag here.”