[photopress:real_estate_generic_beijing.jpg,full,alignright]In any booming market there is always a group which says this will end. And they are correct. No boom is forever although some have lasted decades.
The question is not whether a boom will eventually end. It is when.
While a number of economists argue that China will continue its turbo-charged growth and overtake the United States as the world’s economic leader others are saying in must end. But not when.
However, some private institutes say it would be wise to closely monitor China’s overheating assets market and exercise caution when investing in the region after it hosts the Olympic Games next summer.
LG Economic Research Institute said that the chances are growing for China’s assets bubble to burst after the Olympics fever subsides. (In saying that it ignores the boost that Expo 2010 will give to the economy bringing more vistors to China than the Olympic Games.)
The report said, ‘We can not rule out the possibility that the Chinese real estate market could enter a long-term slump due to weakness in investor sentiment in the post-Olympics period.’
There are precedents but they are contradictory. Barcelona and Seoul saw their real estate markets grow rapidly prior to hosting the summer games in 1992 and 1988, respectively. In the years immediately following the games, Barcelona’s real estate prices started to lose steam, while Seoul’s market bubble expanded.
LG Economic Research Institute said that China’s real estate market might face a slowdown like Barcelona after the Olympics, with a huge amount of debt going sour.
However, an economist at BNP Paribas Asset Management in France begs to differ.
Claude Tiramani said, ‘I strongly believe China will grow further even after it holds the 2008 Beijing Olympics as the games will only account for 4% of its GDP, compared with 28% for Korea’s 1988 Olympics.’
Source: Korea Times