China's property market woes have been widely covered by the global media, sparking concerns about the health of the world's second largest economy. Now, a Chinese real estate mogul has gone a step forward to compare the market to the ill-fated "Titanic" that sunk in the Atlantic in 1912.
"I think China's property market is like the Titanic and it will soon hit an iceberg," said Pan Shiyi, chief executive of Soho China Ltd. -one of the largest real estate developers of the country - to a financial forum last week.
"I'm not optimistic about the housing market," China Business News quoted Shiyi saying.
"I think China's real estate is the Titanic and will soon hit the front of the iceberg. After hitting the iceberg, the risks will not only be in the real estate sector. The bigger risk will be in the financial sector," he said.
The comments have escalated worries about the Chinese property market. According to The Wall Street Journal, Pan Shiyi proceeded to voice his opinions on the national housing market only after he was assured that there were no journalists in the forum. After the comments hit the web, he took to his Weibo account to say:
"I didn't expect there are countless reporters hiding [in the audience]"
Just a day after Pan Shiyi's comments surfaced, China Vanke, the largest property developer of China told Bloomberg that the "golden era" of the country's housing market has passed.
"The period in which everybody makes money out of property is gone," President Yu Liang told reporters.
China Vanke also added that growth in the market has started to slow down and being the "big brother" it was obliged to alert the market of the risks out there. However, it added "it doesn't mean we are bearish on the property market," and said that the "silver era" has just begun for the country.
"The industry is now after quality and service and back to real demand...The industry was worth 8.1 trillion yuan ($1.30 trillion) last year, even growing at a single-digit rate, it's still large enough for us," Yu was quoted by the Chicago Tribune.
An earlier Realty Today Article elaborates on the Chinese asset bubble:
Indeed, investment in real estate has declined in four major provinces of the world's largest economy with two of them seeing about 25 percent slumps (Heilongjiang and Jilin). There is an oversupply of property but hardly any sales because of the tight purchase regulations. In a separate report, it was revealed that land sales in 20 of the major cities fell by 5 percent in March. The value of land also decreased 27 percent in April.
"The downturn this time is more serious compared to 2008 and 2011," Alvin Wong, analyst at Barclays told The Journal.
