The Anecdotes Of The Chinese Real Estate Bubble

china real estate homes bubble

[credit provider=”emilie raguso on flickr”]

Remember Guo Shiping?

He is a professor at Shenzhen University.  I have mentioned previously that he predicted that real estate prices will fall by a half in the next few years.

What I did not mention in that previous article was that, he also told us that he has a student who has once held 680 flats in Dongguan, and now he has sold all 680 of the flats.

What? 680 flats?

Well, this case is probably the largest case ever surfaced to the public conscious.  Most of the cases we can still read from various Chinese media concerned at most dozens of flats. 

Below is just some of the cases of real estate speculations over the past 2 years or so taken (and translated) from various Chinese media, from young professionals flipping over a few properties, to rich housewives spending millions within a hour.  Many of them are probably sitting on huge amount of profits, for now.

25 May 2011 How this group of 25-35 year-old speculators profit from the bubbles

They get special discount from real estate developers, or some unallocated flats which were originally for civil servants.  Then they will sell them quick and cash in.  One of them said he/she has flipped more than 20 properties in such a way in the past few years, and the average return has been above 50%.

They are very sensitive to policy risks though, and before government’s measures to curb prices were implemented last year, they have started selling off their holdings…

19 April 2011 Selling 680 flats

Last week, there was a report that someone sold about 100 flats at one go in Shenzhen.  Many speculators were trying to sell all their holdings before new measures are implemented.  But the record of selling 100 flats has been broken.

According to Professor Guo Shiping of Shenzhen University, there was one investor who just sold all of 680 flats previously held… “It took quite a while to sell more than 600 flats… I can’t possibly tell how much profit was made, but I can tell that’s a lot” said Professor Guo.

10 Jan 2011 People’s Bank of China’s survey: 18.3% of Beijing residents own more than one property

According to the survey, 72.4% of Beijing residents live in properties they own, 18.3% of Beijing households own more than one property.



11 Oct 2010 Buying flats is just like grocery shopping

The leader of Wenzhou real estate group-buying Mr. Zheng has led hundreds of real estate investing groups for the past 11 years.  Once of the most recognised claim he has made is “Wenzhou folks buy real estate as if they were buying vegetables”.

2 June 2010 Wenzhou “Post-80s” generation speculate in Shanghai real estate market

“It is quite common “Post-80s” (i.e. people born in the 1980s) from Wenzhou like me who have more than one apartments.  Those “Post-80s” from really rich families would buy townhouse, factories, etc, while others like myself would buy small apartments, flats, etc.” said Zhou Bu-en.

In 2004, he started to speculate in the market.  With zero down-payment, he bought a flat in Pudong.  In the next few years, he used bank mortgages to levered up and bought another 4 properties.  The total market value amounted to some RMB7.5 million (note: should be higher now)

Who said there is lack of leverage?

6 April 2010 Wenzhou real estate group-buyers in Wuhan

In various sales office, real estate investors groups from Wenzhou appeared frequently…

14 September 2009 Wenzhou Housewife bought 10 properties in 30 minutes

In June, one housewife from Wenzhou bought more than 10 properties within half an hour, probably spent more than RMB10 million.

This article originally appeared here: The Anecdotes Of The Chinese Real Estate Bubble
Also sprach Analyst – World & China Economy, Global Finance, Real Estate

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