[photopress:newapartments.jpg,full,alignright]China had 123 million square meters (1.3 billion sq. feet) of unsold and unleased space in new buildings by the end of March. That is a rise of about 24 per cent over a year earlier. Reports in the local press said that figure does not include property purchased for speculative reasons, much of which also remains unoccupied.
The China Daily cited Yin Zhongli, a real estate expert with the government-run Chinese Academy of Social Sciences, said,’Last year’s figures in Shanghai showed that up to half of the new housing sold was not used.’ He said high vacancy rates could ‘disturb the market order’ and trigger a financial crisis.
The China Daily also cited a report by Beijing Normal University’s Finance Research Center showing that at least 70 percent of city dwellers cannot afford to purchase new apartments. It said that investment in apartments meant for low and medium income families rose by less than 3 percent, compared with a 23 percent rise in total spending on residential property. Almost 60 percent of the unrented and unsold property is in the residential sectormeaning an estimated 700,000 apartments are unoccupied.
The government has warned that excess investment in property and other construction, as well as some industries, is keeping China’s economic growth at unsustainably high levels and boosting risks for banks that are financing such spending. However the rush by foreign investors into the property sector appears to have slowed. Investment in real estate fell 4 percent in the first quarter of this year compared with a year earlier, to RMB 5.2 billion (US$650 million), the bureau reported.