Jakarta, CNBC Indonesia – A recent report shows that the property crisis in China has made many new areas into ‘ghost towns’. The reason is that many properties have failed to sell in the Panda Country.
Quotes CNN InternationalMark Williams, chief Asia economist at Capital Economics, estimates that China still has about 30 million unsold properties. That number can accommodate 80 million people.
“Such projects have attracted attention for years, and have even been dubbed China’s ghost towns,” he said.
Real estate and related sectors are a large part of the Chinese economy. The sector accounts for more than 30% of the country’s total GDP.
But lately property development in the country has declined. Even after China rebound of the post-pandemic slowdown.
“Residential property demand in China is entering an era of sustained decline,” Williams wrote in a research note.
In addition, there are new problems that arise again. As much as 90% of new properties in China are sold before completion, which means that any setback for property companies can directly impact buyers.
“[Ini] gives authorities a strong incentive to ensure that ongoing projects continue as failed developers are restructured,” Williams added.
This has also shaken some of the country’s property companies, such as Evergrande, which owed Rp. 4,000 trillion. But it’s not just Evergrande, 12 Chinese real estate companies defaulted on bonds totaling about 19.2 billion yuan in the first half of this year.
“This accounted for nearly 20% of total corporate bond defaults in the first six months of this year, the highest of any sector in mainland China,” said Christina Zhu, an economist at Moody’s Analytics.
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