Chinese Business Wisdom published an article asserting that China’s real estate boom is ending. It started with the resignation of Mao Daqing, CEO of the Beijing Region of China Vanke Co., Ltd., who decided to jump ship and resign from Vanke on March 8. Vanke is the most successful privately owned real estate company in China.
The article quoted a financial analyst who stated that some real estate developers have taken their un-sold houses and sold them to their own employees. They encouraged their employees to buy as many houses as they could and also to apply for bank loans. "This might be the last money the developers will get. If the situation gets worse, these developers will run and leave the problems to their employees and the banks."
The analyst’s suggestion for Vanke’s strategy? "(They should) build as much as they can on the land they have already obtained, sell as much as they can of their overstocked houses, and close the company when they can’t sell anymore."
The government is still encouraging real estate purchases and keeps buying overstocked inventories from developers. However, "apart from the first-tier cities and cities with large inflows of population, the remaining large number of cities cannot stimulate the real estate market. The difficulty in raising money and being stuck with large inventories are still the real estate developers’ number one enemy."
Source: Chinese Business Wisdom, March 10, 2015
http://www.bwchinese.com/article/1068643.html