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Thread: Assets bubble in China

  1. #1
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    Default Assets bubble in China

    Recently, spent time looking into the asset bubble in China. This is a bubble, huge one, the questions are to what extent the bubble will grow and when it will burst and the consequences of that, particularly to Sg.

    In US, it is only 1,000,000 properties foreclosed yearly since the subprime. In China, there are 64,000,000 vacant properties.

    I read the asset bubble in Japan, Spain, which started before US subprime, Dubai, PIIGS, and then US. All have different causes but not that different in substance. Over the East, the property bull in Jakatar, HK, China, Sg, India. This shows a great inbalance of fund flow.

    For China, cooling measures have been introduced on the LTV, bank reserves, number of property be purchased per household / foreigners, etc etc. Definitely, it needs time to cool, couple with the big supply and number of vacant properties, if anything happens, the consequences just simply beyond what I can think.

    For US, they are printing themselves out from debts and recession. The strategy will be copied by the EU countries if needed. China will find eventually the US debts they hold are worthless.

    US is the biggest debtor, with the high unemployment rate with some states at 15%, the recovery still someway to go.

    The issues are very interesting and complicated. As Sg is a very open economy, if China asset bubble burst, what will be the likely impact on Sg???

    There are many experts in this forum, view sharing is appreciated.

  2. #2
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    Quote Originally Posted by Laguna
    Recently, spent time looking into the asset bubble in China. This is a bubble, huge one, the questions are to what extent the bubble will grow and when it will burst and the consequences of that, particularly to Sg.

    In US, it is only 1,000,000 properties foreclosed yearly since the subprime. In China, there are 64,000,000 vacant properties.

    I read the asset bubble in Japan, Spain, which started before US subprime, Dubai, PIIGS, and then US. All have different causes but not that different in substance. Over the East, the property bull in Jakatar, HK, China, Sg, India. This shows a great inbalance of fund flow.

    For China, cooling measures have been introduced on the LTV, bank reserves, number of property be purchased per household / foreigners, etc etc. Definitely, it needs time to cool, couple with the big supply and number of vacant properties, if anything happens, the consequences just simply beyond what I can think.

    For US, they are printing themselves out from debts and recession. The strategy will be copied by the EU countries if needed. China will find eventually the US debts they hold are worthless.

    US is the biggest debtor, with the high unemployment rate with some states at 15%, the recovery still someway to go.

    The issues are very interesting and complicated. As Sg is a very open economy, if China asset bubble burst, what will be the likely impact on Sg???

    There are many experts in this forum, view sharing is appreciated.
    the problem with china is that rental yield is zero, and negative if you count the management fee and such. My wife's friends own 15 properties in chungking, and she could get renters for none of them.

    One of the developers in Singapore has a significant presence in China. I would not hold shares of that company.

    if china's real estate has a hard landing, liquidity in Singapore would be wiped out. and then watch out for properties favored by speculators, which are "luxury" condos in prime districts. properties in OCR would be less affected, as they are supported by fundamentals.
    Last edited by stalingrad; 7th December 2010 at 09:25 AM.

  3. #3
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    There is quite a lot of empty apartments in China now. Pray hard China does not burst so soon. Singapore will go down with it.

  4. #4
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    Would be good if someone could post links of credible articles written about this topic here. Worth reading.
    I heard that because of the huge reserve that China has... this bubble can get so so big but yet will not burst.

  5. #5
    Exalted

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    always been toking abt bubble in china ....first i heard was in 2006....considered burst in 2008-09?? there is a correction..

  6. #6
    Junior

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    Actually China's price to income ratio is still healthier than Singapore or HK. HK and Singapore is around 15x - highest in the world. This means a person who makes 100k per annum on average buys a 1.5 million property - 15x his income. China is around 13x. The power of leverage. Sometimes I really dunno why people take up 15x of debt but life's like that. As to empty apartments, Singapore will have quite a bit of empty apartments as well as more TOP next year. Many developers are merely hoarding units to keep prices artificially high.

    If I may add, China has more stringent lending criteria - LTV is only 60% and many people buy with cash. So if China is a bubble, what is Singapore? With LTV of 80% and 15x income?

  7. #7
    Exalted

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    some say china richies buy ppty in full cash....can afford to leave it vacant....how true i duno

  8. #8
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    i like that....amazing...this world really amazes...
    Quote Originally Posted by Wild Falcon
    Actually China's price to income ratio is still healthier than Singapore or HK. HK and Singapore is around 15x - highest in the world. This means a person who makes 100k per annum on average buys a 1.5 million property - 15x his income. China is around 13x. The power of leverage. Sometimes I really dunno why people take up 15x of debt but life's like that. As to empty apartments, Singapore will have quite a bit of empty apartments as well as more TOP next year. Many developers are merely hoarding units to keep prices artificially high.

    If I may add, China has more stringent lending criteria - LTV is only 60% and many people buy with cash. So if China is a bubble, what is Singapore? With LTV of 80% and 15x income?

  9. #9
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    Most of them i know loves to boast.
    I am sure most of us come across most of them.
    Checkout the definition for "boast"
    Most but not ALL (incase i get )

    Quote Originally Posted by devilplate
    some say china richies buy ppty in full cash....can afford to leave it vacant....how true i duno

  10. #10
    Junior

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    singapore so so small and china is so big. actually I find it is quite difficult to compare. many other factors counts. we probably capture the 1% riches around the world who no need the money but just dump their money here. up or down they dont really care.....

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