China’s mass market housing remains affordable and is not likely to suffer from a bubble pressures in the top-tier cities and high-end segments.
Liew Mun Leong, CEO of Capitaland, said that opportunities in the retail property market continue to expand across mainland China.
The property market in China is buzzing, and fears of an asset bubble have triggered investor caution and government intervention over the Chinese property market.
However, Mr. Liew noted that the risk of a bubble formation is restricted to a few segments of the property market, like the tier-one cities and high-end residential sectors.
Mass market housing in China remains affordable, and is a segment which the company is interested in.
“It has not gone to the extent that it is not affordable. Today, they are going about 30-40 per cent. Which means they use 30 to 40 percent of their income to pay for the housing mortgage,” said Mr. Liew.
"To us, that is something that is very fair. Even in Singapore, it is just below 40 per cent. So for that housing in China, it is fair. It is not alarming."
He added that in Q1 2010, about half of the homebuyers across the country were categorized as first-time owners, while only a fifth were investors. Thus, there are unlikely small chances of a bubble growing outside the first-tier cities or high-end market.
Mr. Liew also expects the retail property market to pull ahead.
Currently, about 20 percent of acquisitions in China were made through organized trade establishments such as shopping malls, compared to only two-thirds in Singapore. As a result, the expectation for growth in the property segment in China is high.
Mr. Liew also sees improving transport links as another factor that will contribute to the growth of the China property market.
"Once travelling time is reduced, urbanisation will increase, the economy will expand, domestic consumption will expand,” he said. "The connections and mobility between the rural and urban areas will be enhanced, and this has a real economic impact, just like what happened in the US a hundred years ago."