Sunday, August 17, 2008

Chinese Property?

Apparently they are having problems with their housing market also.

Olympian Bust? -
If you're looking for good deals on housing, check out China. The country may be entering a period depressingly familiar to Americans

The sales hall at the Oasis housing development welcomes customers with multicolored streamers, water fountains and marble floors. Sales agents announce that only a few units are available from the first two phases of the project and that 70 of the 130 or more buildings are almost completed. But a few hundred feet behind the sales hall some of the "almost completed" buildings look like neglected, hulking shells. Construction workers idling nearby say they haven't been paid in five months. Prices have been slashed from $95 per square foot to $55. Market experts estimate that as few as 300 units have been sold out of the first 2,000 put up for sale.

Sounds like another sad-sack Florida condo development, yet this scene is in the northern Chinese industrial city of Shenyang. Over the last five years real estate prices in China, in dollar terms, doubled on average to $50 per square foot and the country added 20 billion square feet of new residential property. But the once seemingly limitless real estate boom is going into reverse.

Home sales dropped by half in June from a year earlier in Shanghai, Shenzhen, Guangzhou, Chongqing and Chengdu, according to data compiled by jpmorgan. Conditions are worst in southern China, where undeveloped parcels are going unsold and home prices are expected to continue falling despite a drop of 40% from last autumn in some neighborhoods. Now the market malaise appears to be spreading northward. If not for an Olympic boost, Beijing's market would be weak, too. "We're entering a bust now," insists Andy Xie, an Asia economist and bear on Chinese property.

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