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China's Biggest Real Estate Developer Approved for IPO

As with politics, all real estate is local. While there may be short-term bubbles in the hot Beijing and Shanghai mkts, China continues to urbanize at a rate and scale never experienced previously in history. Look to the second-tier cities, where property remains modestly priced and growth continues unabated. Xi'an, for example, just published its city development plan:

"Under Xi'an's new development plan, which was approved by the State Council of China on May 10, 2008 and covers the years 2008 through 2020, the population of the Main City Zone is expected to grow from 3.1 million people in 2007 to 4.5 million in 2010 and 5.28 million in 2020.

The new development plan also specifies that the average living area per person in the Main City Zone will increase from 161 square feet in 2007 to 237 square feet in 2010 and 355 square feet in 2020. To meet the new living area specifications, 567.4 million square feet of new housing will need to be built by 2010, and a total of 1.4 billion square feet of new housing will need to be added in the intervening 13 years from today to meet the new minimum specification by the end of 2020."

This is typical of growth projections for large cities in China. A recent McKinsey report estimated that China will soon have a billion urban residents, an increase from the present 650 million or so -- an increase roughly equivalent to the present population of the US.

Chinese real estate development has a considerable run ahead, with the occassional Beijing bubble along the way.

Disclosre: I own China Housing and Land Development (CHLN: NASDAQ)