Zhang Xin, chief executive of Soho China, one of the country’s most successful privately owned property developers, told the Financial Times a large bubble is forming in the Chinese property market as a result of the massive increase in bank lending that is the central component of the government’s economic stimulus program
The surge in lending by the banks of China so far this year has caused rampant overbuilding that risks the country’s long-term growth prospects.
Zhang Xin said, "Real estate prices should only go up because people want to actually use the space, but at the moment we can see more and more empty buildings across the whole country and in every real estate segment.
"The rising prices are a direct result of so much money coming from the banks and the Chinese banks should be very worried."
Market News.com said that Zhang warned that the current speculation was a bad sign for future growth.
She said, "In Manhattan, they have vacancy rates of 10-15% and they feel like the sky is falling, but in Pudong (a major business district in Shanghai) vacancy rates are as high as 50% and they are still building new skyscrapers.