China: massive growth in 2008?

The China real estate market is set to flourish this year…

China´s breakneck urbanisation and strong demand for homes will result in a bumper year for the Asian giant’s real estate industry in 2008, according to industry analysts. Investment in the real estate sector is forecast to ease to 25.0 percent growth from 29.5 percent, which is small drop but still represents significant growth.

“We expect the industry to maintain its high pace of development,” said Wei Bo, property analyst with Central China Securities Company (CCS): “New demand from the country’s urbanization progress, growing requirement for larger and better homes among the Chinese, as well as rising investments caused by the appreciation of the Chinese currency and the existing negative interest rates, will probably help the real estate industry’s fortune for another year.”

As well as China’s fast-paced urbanisation, which according to UN forecasts will mean 16-22 million people migrating to cities from rural areas in the coming years, the population has also enjoying a rise in disposable income, all of which is promising news for developers. In the first nine months of this year, disposable income for city dwellers expanded 13.2 percent to 10,346 yuan (US$1,398).

However, land prices have been increasing alongside demand with nationwide rises averaging 9.8 percent, 13.5 percent and 15 percent respectively in the first three quarters of this year