Boston, MA -- (ReleaseWire) -- 04/10/2014 -- Real estate prices in China are wavering from historic stability and curbing measures are continuing, particularly in major cities. The overriding sentiment in the country's residential and commercial real estate market is that a slowdown is underway. Many developers are struggling with liquidity issues, and the increase of shadow banking assets in infrastructure and real estate is a significant risk to construction across all three of the real estate segments featured in this report: retail, office and industrial.
The China real estate report examines the commercial office, retail, industrial and construction sectors in the country from the perspective that the market, which has experienced exponential growth over recent years, is starting to succumb to the impending conflagration of market weakness.
The authorities have become increasingly concerned about the potential for accelerating real estate prices to enter bubble territory, and as a result, have rolled out a number of policies aimed at curbing speculative activity. However, the result of this has been limited and prices have continued to rise. The government has stated it will maintain controls on the property market in 2014.
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In terms of the Chinese economy; it looks to be buckling under the weight of its credit binge and we have not many any significant changes to our China economic forecasts as our underlying assumption remain relevant. Our long-held view that the bounce in economic activity seen in early 2013 would fade by midyear is playing out, and we continue to see negative shocks on the horizon as the fragile banking system buckles under a slowdown in credit growth.
Expectations for a robust recovery in 2014 are likely to be met with disappointment as the rebalancing process proves to be a long and drawn out affair. The Chinese growth slowdown is likely to negatively impact upon the real estate market during the rest of 2014, with real GDP growth of 7.1% posited, down from the 7.6% estimated for 2013. Growth is expected fall over the rest of BMI's forecast period, to 6.0% in 2015 and 5.8% in 2016, 2017 and 2018.
Key trends and developments:
- It was announced in August 2013 that the core structure of the 632m Shanghai Tower in Shanghai's Lujiazui commercial district, had been completed. The tower will contain office and retail space as well as a hotel and cultural venues.
- Singaporean property firm Capital Malls Asia is to acquire a shopping centre in Beijing. The firm will pay US$283mn for the Grand Canyon Mall, which is being sold by Chinese property firm Capital Airport Real Estate Group. The mall consists of 70,000sq m of gross floor area and is 93% leased.
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