BEIJING”•China’s richest man, real estate magnate Wang Jianlin, has warned the country’s property market is the “biggest bubble in history””•the latest alarm bell to be sounded on the world’s second largest economy.
Wang, the owner of real estate and entertainment conglomerate Wanda, said property prices continue to rise in the country’s big cities but fall in smaller ones saddled with huge inventories of unsold new homes.
“I don’t see a good solution to this problem,” Wang, whose group owns more than 200 malls, shopping complexes and luxury hotels across China, told CNN in comments published on its website.
“The government has come up with all sorts of measures”•limiting purchase or credit –but none have worked.”
Urbanization and property development have fueled China’s economy, the world’s second largest and a vital driver of global growth.
China’s long property boom, driven by credit and government spending, made fortunes for many owners as new districts mushroomed across the country.
But growth has hit the doldrums in the last two years, with new buyers priced out despite government borrowing restrictions reining in soaring costs.
Many more peripheral cities have become “ghost towns” full of empty and unsold residential property, even while in the larger metropolises property prices skyrocket.
Tiny apartments with no running water or toilets located in Beijing’s good school districts sometimes sell for prices comparable to properties in Mediterranean tax haven Monaco.
The stumbling property market, combined with a sluggish manufacturing sector and mounting debt, has dragged on growth, which last year came in at its slowest rate for a quarter of a century.
Concerns about China’s growing debt mountain led a global central bank watchdog to earlier this month issue a warning that the country’s banking sector is facing an imminent crisis.
The Bank for International Settlements”•dubbed the central bank of central banks”•said a gauge of Chinese debt had hit a record high in the first quarter of the year.
While Wang said he was not worried about a hard economic landing, “the problem is the economy hasn’t bottomed out.
“If we remove leverage too fast, the economy may suffer further. So we’ll have to wait until the economy is back on the track of rebounding”•when we gradually reduce leverage and debts.”
In recent years, Wang has shifted his company’s focus from property to services and the entertainment industry as profits wane in Chinese real estate.
Wanda is in talks to ramp up its push into Hollywood with the acquisition of Dick Clark Productions, the company behind the Golden Globes, the US firm’s parent company said Monday.