ON CHINA REAL ESTATE BOOM

UP, UP AND AWAY...

Great article in the New York Times (registration required) on the real estate boom in China...it starts with this gangbuster opening:

"China Builds Its Dreams, and Some Fear a Bubble

 

By DAVID BARBOZA

   

SHANGHAI, Oct. 16 - Move over, New York. This year alone, Shanghai will complete towers with more space for living and working than there is in all the office buildings in New York City.

That is in a city that already has 4,000 skyscrapers, almost double the number in New York. And there are designs to build 1,000 more by the end of this decade.

China's real estate market is so hot that miniature cities are being created with artificial lakes, and the country's nouveau riche suddenly seem eager to put down as much as $5.3 million for a luxury apartment in skyscrapers with names like the Skyline Mansion."

Another eye-opener midway through the article:

"It is not surprising that in a country where 170 metropolitan areas have more than a million people, according to government figures, everyone seems to want to be a developer.

State-owned oil and steel giants, automobile companies, shipbuilders and even Communist Party newspapers are creating real estate subsidiaries."

The economic circumstances and pricing are different, but some of these anecdotes are reminiscent of the property boom in Japan in the eighties, when land in Tokyo was valued higher than all of the property in the US.

China no doubt has great economic and investment potential over the next few decades, but it's important to keep reminding ourselves that it'll be a really bumpy road.

 

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