J.D

China's Biggest Real Estate Developer Approved for IPO

There's a huge oversupply of empty shell buildings and new construction in China. R/e returns have been driven by capital gains not revenue streams and now-falling asset values aren't recognized on the books.

Some branches of government are trying to stop the investment in real estate to moderate the impact of a potentially imploding bubble. It even appears floorspace is being artificially held off the market to try and hide the problem.

Real estate developers, construction companies, and government in China are closely linked. The idea of an entrepreneurial class of developers is China is unrealistic. Corruption is a major part of the game. R/E is probably one of the worst investments in China at present.

Yes, real estate will help combat inflation as real prices will continue to fall. The huge glut of money in China has nowhere to go and is being devalued by an under-estimated monetary inflation problem.

China's Biggest Real Estate Developer Approved for IPO

Wait until China's real estate glut works itself out before you buy. It's difficult to make money from an oversupply of empty shell buildings.

In any case, government should get out of the real estate business instead of asking minority investors to buy in and finance their whims and boondoggles.

Considerations on Investing in China

China's stock market has fallen far. It will fall even farther as SOEs - the backbone of the Chinese economy - reveal their poor earnings in 2008. Taking losses on cross holdings will be very, very painful.