In China, most real estate in hands of speculators?

August 17, 2010 | Posted by Chris

A developer's vision for an apartment complex in China's tropical Hainan Province, above.

While it's been widely reported that real estate in China is red-hot and the government has taken measures to cool it down, a new report published today by Bloomberg sheds new light on residential real estate in China's big cities.

According to the report, 51% of all Shanghai apartments, 66% of all Beijing apartments, and 70% of all units in tropical province Hainan are presently empty, belonging to speculators waiting for a return on their investment. Bloomberg writes:

"Investors and speculators are the owners of the vacant houses" as they wait to sell their properties at an appropriate time, said Lu Qilin, a Shanghai-based researcher at Uwin. "It's important for the government to introduce more measures to curb speculation."

The rampant speculation in real estate in China is understandable, given that last month year-on-year prices grew by 10% -- and that is the slowest pace in 6 months.

And whether or not this represents a real estate bubble -- expert opinions span the spectrum from "What bubble?" to "Global doomsday" -- these stunning statistics reflect the unique situation and challenges that China faces. With so many people and such limited space, Chinese leaders will be hard-pressed to keep housing costs within the reach of ordinary citizens, a problem that is surely among other high-priority domestic issues.

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