Chinas Real Estate Could Affect Global Economy Negatively

Published Date : Jun 10, 2014

The world’s fastest growing economy depends heavily on property, which could affect globally.

This is bad news for people holding real estate, but it could be a potential worrying signs for global investors. China’s economy is heavily dependent on the property sector. The real estate sector in China amounts to around 20 percent of the total GDP.

A sharp fall in this sector can affect globally, as China’s is one of the world’s leading trading country. Many factors are contributing towards the decline in prices. Markets in major cities are also being affected with knockdown properties which are dumped by government officials or overextended investors who are trying to get rid of undeclared assets.

China’s most famous property mogul, Pan Shiyi asked if the government will save the market if there is fall in the housing prices. Shiyi is the chairman of a large real estate developer called SOHO China. This group has made many pronouncements in past few weeks. These have reflected in an increasingly long-term outlook for China’s real estate sector.

At an industry forum held during late May, Shiyi also compared China’s real estate future to the Titanic. He said that the real estate sector soon will hit the iceberg in front of it. According to Standard & Poor organization the residential housing prices in China will fall by 5% this year which is a large reversal from the previous year’s rise of 11.5%

One recent report from Chinese media stated that a coal-mining magnate was trying to get rid of a hundred apartments which are located along the Beijing’s Second Ring Road.