Ronnie Chan, chairman of Hong Kong- based developer Hang Lung Properties Ltd. (101), said “humongous demand” from consumers and action by the central government reduce the chance that China’s property market will collapse.
Concerns over a real estate bubble are “total crap,” Chan said today at the Milken Institute Global Conference in Beverly Hills, California. Home prices last year rose 26 percent in Shanghai and 29 percent in Chongqing, leading the government in Beijing to raise minimum down-payments for second-home purchases and tell local officials to set price targets on new properties.
“People use the word so loosely,” Chan said of the term “bubble” to describe China’s real estate market. Much of the existing housing in the country is “substandard” and will never be occupied as consumers demand higher-quality homes, he said.
“Those will be torn down, and a lot faster than you think,” said Chan, who in 1991 took over the development firm founded by his father and now is spending $5.1 billion on malls and offices in five Chinese cities outside Shanghai.
Premier Wen Jiabao on Jan. 18 said the government will “resolutely” implement controls aimed at speculative buying. Property prices rose for a 19th month in December, even after Beijing suspended mortgages for third-home purchases and restricted loans to developers. The 6.4 percent gain in December was the smallest in 13 months, according to SouFun Holdings Ltd.
The key to getting projects built in China, which has 83 cities with more than 3 million people, is a “good mayor” who is in favor with party officials and understands the needs of both the community and developer, Chan said.
“It depends a lot on how firm and strong he is,” he said.
To contact the editor responsible for this story: Kara Wetzel at email@example.com -0- May/02/ :39 GMT