The problem with realty market

Some media reports say a few local governments have eased the restrictions on housing purchase and even issued loose credit and loan policies to help boost the housing market. That Hong Kong-based business magnate Li Ka-shing has sold off an office building in Shanghai which he bought in 2011 has added to the uncertainties of the housing market, says an article in Economic Reference. Excerpts:

Since August 2013 Li Ka-shing's company has sold off nearly 20 billion yuan ($3.25 billion) worth of properties. As a magnate who has excelled in the real estate sector, Li's business moves are usually regarded as investment indicators in China. Besides, he is also known for his risk control measures in the market. So, why is he selling off his properties on the Chinese mainland?

The demand and supply in the housing market have reached a turning point. A recent survey conducted by Peking University shows that on average a Chinese family owns 1.35 apartments and, to some extent, the supply in the housing market now exceeds demand. No wonder, a smart and wise real estate investor like Li has been selling his properties to make profits.

The real estate markets in Western countries are yielding higher investment value now, especially after the bursting of the property bubble. This April, Li's company bought two properties in London in the hope of making better gains in the near future. Other real estate companies, like Wanda and Greenland, too have started investing in real estate overseas.

The Chinese economy is now in transition, there are still great uncertainties ahead. The slowing-down economic growth could have a huge impact on the housing market. Given these facts, wise investors are not expected to put all their eggs in one basket.

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(China Daily 08/19/2014 page9)