Chinese real estate is undoubtedly one of the most unique and important real estate markets in the world. This is probably because the construction sector in China has never experienced a real downturn. On the contrary. It has been seen that even during the period of the pandemic emergency, this economic power has managed to continue undaunted in the realization of new projects and structures. So that the population could return to normal as soon as possible. It seems, however, that this trend for years positive, is destined to suffer a setback. Today, in fact, we at Realigro, will show you why the Chinese real estate market is presenting extremely worrying data. So, if you’re ready, we can begin!
You may ask yourself: how is it that a reality so stable economically and known worldwide as a great power in the use of new technologies, can now be in such a dramatic situation? The answer? The massive debt in Chinese real estate. Debt that, according to experts, could weigh on the country’s economy for many years.
If, in fact, many buildings have been constructed and completed during the pandemic emergency, there are just as many residential complexes that stand out within construction sites that are still open.
To better understand how serious the situation is, we will examine the Chinese GDP.
Well, according to the data relating to it, the real estate sector in China represents 29% of GDP. A significant percentage, which in the last 15 years has been the leading sector of the Asian Tiger economy.
The real estate crisis is therefore likely to be the final blow to the Chinese economy. Let’s see in detail how Chinese property owners are moving. Also in this case, it is clear the need to raise the real estate to avoid a serious crisis. In fact, the prices of houses for sale have fallen by up to 30%. On the other hand, however, the government has expressly forbidden the application of further discounts to avoid a devaluation of Chinese real estate itself.
In fact, the maximum discount threshold has been set at 15%.
In order to fully understand the dimensions and characteristics of this phenomenon, it is also appropriate to analyze the attitude of local investors. Considering the general disorder in which the sector finds itself, there are many investors who are waiting for new government decisions. This is because monetary conditions on real estate loans are very stringent.
But another issue deserves special attention. That relating to the mismanagement of financing sources by local authorities.
In fact, what has contributed to the increase in China’s real estate debt is the squandering of money deriving from the sale of public land on unnecessary residential and other projects. Projects developed, moreover, in areas where the demographic level has plummeted.
Will China be able to recover from this dramatic situation? Will the Chinese real estate market bring down one of the strongest and most stable economies in the world? To find out, you just have to stay updated on our portal Realigro!
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