The measures announced by the central government to curb property prices are affecting developers, said Shui On Group Chairman Vincent Lo, who also dismissed fears of a bubble in the Chinese real estate market.
China is facing a long term real estate supply shortage, said the chairman of one of the largest developers on the mainland.
”I don’t believe there is a property bubble in China at this point in time,” he said. “There is not enough land (on which to build) in China. That is a very important consideration. There’s just not enough land.”
He added that there is abundant money in the market. “We still have one third of our buyers coming to pay cash. They don’t even need a mortgage. What’s important is the market is not over-leveraged like in the West.”
Real estate prices were being driven by the country’s growing economy, which expanded 10.3 percent last year, as well as rapid urbanisation, with a further one percent of China’s 1.3 billion people moving to cities every year, he said.
Mr. Lo, however, cautioned that developers were starting to feel the pressure, as Beijing controls bank lending to prevent asset bubbles and curb inflation.
“The industry is starting to feel it. That’s why a lot of developers are keen to issue bonds, including ourselves. I expect, going forward, credit will not be as easy especially with high inflation,” he said.
The government has prioritised fighting inflation, following a 4.6 percent year-on-year increase in the consumer price index in December, lower than the two-year high of 5.1 percent in the previous month.