Submitted by Mark Budden, EC Harris, Area Leader, North Asia
Biography
Based on recent announcements released by the Chinese Government, 970 million sqm of residential units were sold in 2011, while 1.4 billion sqm of residential projects are currently under construction in China. This shows a significant surplus of residential units in the coming year. Due to these surplus, developers face increasing pressure to attract buyers.
Developers are also feeling the heat as the China Banking Regulatory Committee has mandated five years for the collection of bad debt. In order to attract buyers into purchasing property, developers will face changes in the positioning of property. These might include appealing offers such as- assisted living, transition of the developments into hotels, offices or even marketing them as luxury units.
With the interest rates likely to be raised this year to support a likely drop off, I wonder how long it will take before China’s residential market reflects the supply and demand curve! Will developers be able to face the pressures of this challenging market?
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