Seeking Alpha

zach kang

zach kang
Send Message
View as an RSS Feed
Latest  |  Highest rated
  • China's Real Estate Industry - A Beach Ball Being Held Under Water? [View article]
    Just an update: NBS data showed that 10.6 billion square meters of properties were under construction by the end of 2012 which at least half of is residential. So 8.2-5.3=3.9 b/sm. Just by finishing the construction already started, the hard demand is satisfied until 2020.
    Mar 5, 2013. 07:27 AM | 1 Like Like |Link to Comment
  • 3 Cheers For New Data? [View article]
    I have been thinking about this and would like some insight.
    If under authoritarian government, in order to keep the GDP growing at above 8%, the government chooses to print more money and inflate the economy at a rate which reported to be around 3 percent, even though the actual inflation rate on the street may be above 10% or more, nobody is dare to do anything about it, how far can the state go? Is it true that as long as its people are taking in all these inflation willingly or unwillingly, the miracle of Chinese economy will forever be chanted?
    Dec 6, 2012. 10:01 AM | 1 Like Like |Link to Comment
  • China's Real Estate Industry - A Beach Ball Being Held Under Water? [View article]
    Thanks Charlie for your reply
    1) 40m2? I believe in UK and France, 35m2 per person in 2010? I believe 40m2 will happen only if the housing price will falter by then. In 2012 the average housing price is around 6100RMB/SM, if by 2025 we reach 40m2 per person, then each household (3 person) will have 120m2. Using 2012 price they will have to pay 732000RMB, RMB/US= 1/4.5 by 2025? say they take a 30 years mortgage, then they will have to pay around 1,232,000 for their house which is abt $274,000. It means each household will pay abt $9100 per year. annual income for average Chinese in 2010 is around 13476RMB/Year. President Xi has just pledged in 10 years that he will try his best to double that, so in 2020 we will earn 27000RMB/Year, let's say by 2025 we earn 40000RMB/Year, that is abt $9000/Year per person. for one house hold, they will earn $18000. so the DTI (debt-to-income) is above 50, that will be qualified as sub-prime mortgage easily in the US even by the pre-crisis standard. So the current price is already way too expensive for average Chinese in 2025.
    2) Tore down old houses doesn't make new overall demand, as they have to pay for the ones lived in these houses.
    3) It is already too little too late, all the developed countries can be example except maybe US ?(immigration).
    Nov 30, 2012. 06:34 AM | 1 Like Like |Link to Comment
  • China's Real Estate Industry - A Beach Ball Being Held Under Water? [View article]
    Try to understand this about the demand you are talking about. Let's say China keep the same growth rate of the last 10 years, which is very unlikely. by 2025 the bullish estimation of urbanlization rate will reach 65% according to your data. let's say we have 1.4 billion people by then which is also very bullish, we will have urban population around 910MM. each person have 30m2 to live in, we will need 27.3 billion square meter, By 2002 we have 13.1 b/sm urban housing according to the official data, let's say by end of 2012, in 10 years we have finished another 6 b/sm which for sure is an understatement. we have in total 19.1b/sm stock in the market, then we need to complete another 8.2b/sm houses in the next 13 years, that is an average of 0.63 b/sm pr year. I doubt you can find any estimation that says annual Chinese completed housing area is under 0.63 b/sm. Theoretically by 2025 the total population of China will peak according to UN that means we are already in a state of over supply forever.
    So the demand or hard demand is such a joke, the only true demand is investment, people buying empty houses and believe the market will be bullish forever
    Nov 29, 2012. 06:30 AM | 1 Like Like |Link to Comment