China property: “biggest bubble in history” says China’s richest man

China is already the world’s second largest economy. In fact China is a very important country to Malaysia for its huge and growing investments into Malaysia. It’s not just Iskandar but we can see Chinese investments everywhere. In fact they are in the running for the High Speed Rail project and I think they are serious contenders. The property market in China has been booming for many years but within the last few years, some smaller secondary cities are no longer booming. In fact google and you would lots of photos of abandoned malls and empty residential developments. If you go the bigger cities however, everything is normal and in fact prices are still moving upwards.
Interesting piece of news in thestar.com.my on 29th September 2016. Full article here. In brief, the richest man in China, Wang Jianlin says that China’s property market is the ‘biggest bubble in history.’ (Note that bubble in history versus bubble bursting are two very different things.) He said that even as property prices continue to rise in China’s big cities but properties in smaller cities are falling in prices and also saddled with huge number of unsold homes. Wang also shared that he is not worried about a hard economic landing. The problem is however that the economy has yet to reach the bottom. With regards to the government’s intervention measures, he said,  ”If we remove leverage too fast, the economy may suffer further. So we’ll have to wait until the economy is back on the track of rebounding – that’s when we gradually reduce leverage and debts.”
 
Malaysia is much too small and the potential investment cities remain far too few in comparison to China. As long as we read more, we would be well informed enough not to simply buy whatever is being pushed to us as great offer or ‘last few units.’ Reminder, the reason why people lost their money buying into certain developments was also because the market was too hot and everyone has no time to think. The current slowdown is a good time to think. Cheers.
written on 29 Sept 2016
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