“Humongous demand” from consumers and actions by the central government reduce the possibility that China’s real estate market will collapse, according to Ronnie Chan, Chairman of Hong Kong-based developer Hang Lung Properties Ltd.
The concern over a property bubble is a “total crap,” he noted.
Home prices in 2010 jumped 29 percent in Chongqing and 26 percent in Shanghai, leading the Beijing government to increase minimum down-payments for second-home purchases and to order local officials to set price targets on new properties.
“People use the word so loosely,” Mr. Chan said, referring to the term “bubble” to describe China’s property market. “Much of the existing housing in the country is substandard and will never be occupied, as consumers demand higher-quality homes,” he continued.
“Those will be torn down, and a lot faster than you think.”
In 1991, Ronnie Chan took over the development company established by his father and is now spending S$5.1 billion on offices and malls in five Chinese cities outside Shanghai.
Prime Minister Wen Jiabao said on 18 January that the government will “resolutely” implement controls targeted at speculative purchasing.
Real estate prices increased for a 19th consecutive month in December, even after Beijing restricted loans to developers and suspended home loans for third-home purchases. SouFun Holdings Ltd said the 6.4 percent increase in December was the lowest in 13 months.
The answer to getting projects developed in China, which has 83 cities with over three million people, is a “good mayor” who favours party officials and knows the needs of both the developer and community, Mr. Chan noted.
“It depends a lot on how firm and strong he is.”