China Property

Posted: May 9, 2014 in Uncategorized

A leaked conversation of Mao Daquing (VP of the largest Chinese Property Developer, Vanke) is sending shock waves to the institutional investors that now are more thinking when the property crisis will surface and not if it will surface.

In summary

The land value in China is over the pre crash bubble of Japan and Hong Kong. At the pre bubble height in those country the new construction never got over 17 per 1,000 people – in China averages 30 per 1,000 people. The ratio US GDP to land value is over 61%…where all other bubbles exploded (63% for Japan, 61% for US, 66% for Hong Kong)

The biggest issue are the 3rd and 4rd tier cities that unfortunately represent 67% of new constructions and 2 tier cities are at 30%

The Property Sector in China represents officially the 16% of GDP and 33% of infrastructure investments. Plus who knows what of shadow banking.

If it looks like a warning and sounds like a warning, it is a warning.

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