May 2019

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IPG has seen great development in China over the past decade, but worries that many recent developments projects are occurring to quickly and without proposer feasibility studies. Opportunities abound in China, but the recent issues with retail and residential space notes an issue that can kick investors in the butt – China has a real estate bubble that may be ready to pop. The bubble may be bringing opportunities to the more creative investors.

The Financial Times has noted that:

  • As crowds shouted and pushed for the latest iPhone in Beijing on Friday, a glitzy mall across the street was bathed in silence, with just a handful of shoppers hunting for bargains.
  • The frenzy at the Apple store underscored the rise of the Chinese consumer, a development that analysts say is needed to support the global economy and make China’s growth more sustainable.
  • But the empty SOHO complex cast a different light on what is happening in the world’s second-largest economy: consumption is rising, but not nearly as fast as vast shopping centres are being built.
  • A boom in the number of malls without a matching increase in actual shopping gets to the heart of what analysts see as the fundamental problem of the Chinese economy: too much investment, too little consumption.
  • “There was an exponential two or three years where record numbers of malls were built around the country,” said Frank Marriott, senior director for Asia at property consultant Savills. “It has to take a bit of a breather.”
  • Within a half-hour walk from Beijing’s fashionable Sanlitun district, eight shopping complexes have opened in recent years. While one mall called the Village – home to the Apple store that was pelted with eggs on Friday – is bustling, many of the others are visibly struggling.

We will be posting articles, in the near future, for investors interested in capitalizing on the Chinese real estate bubble.