Glut in China's Real Estate, Sinking PMI Spook Investors
A glut of commercial space is vexing the city of Suzhou, said a newspaper in that city. Of the more than 20 shopping centers built in recent years "operating conditions are not ideal in nearly half," the report said.
And a localized real estate "crash" was reported Thursday by a newspaper in the east-central city of Xiangyang after a developer abandoned an unfinished complex of 10 high-rises. Some units had been pre-sold but none were fit for occupancy.
These and other dire reports have hurt but not quashed domestic confidence in the economy. Indeed, real estate demand is reportedly still strong in major cities such as Beijing and Chongqing.
On his blog, Shanghai-based real estate analyst Yang Hongxu of the E-House China research firm wrote Wednesday that "at least for the next five years, the property market will not collapse. But it is undeniable that commercial housing turnover will peak in the next few years, and the real estate industry will no longer be the GDP 'hero' for local governments."In comments accompanying the latest PMI report, HSBC's chief China economist Hongbin Qu said the bank is sure that the Chinese government "can fine-tune policy to keep growth at a steady pace in the coming year." The Chinese government's PMI data for February is due to be released March 1, while HSBC's final PMI report is expected March 3. At the time of publication, the author held no positions in any of the stocks mentioned. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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