John Mauldin just republished in his newsletter one of George Friedman’s bulletins (i.e., Stratfor). The PDF is available here. We know that real estate investment has been a large and growing part of Chinese GDP. In some of the hot cities like Shanghai it has been over 50% of GDP and near 18% for the nation. The Stratfor view is that the bubble is mostly in residential, but that commercial may soon be headed into bubble territory.
The summary:
The real estate market in China, particularly the residential side, is a burgeoning bubble that is growing bigger and more breakable by the day. Land and housing prices were already rising steadily when Beijing’s stimulus package hit the sector in early 2009. Now prices are surging, with developers, bureaucrats and investors cashing in while urban Chinese – once encouraged to invest in home ownership by the central government – become less and less able to buy.
Recommended. Note that you can sign up for Stratfor’s free newletter here.
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