China’s Real Estate Market
Much of the increase reflects the construction of new luxury housing and second homes for the city’s wealthiest residents. Concerned that real estate speculation is putting housing out of reach for a growing portion of the population, the government is taking steps to deter speculation and encourage construction of low-income housing. One has to question whether families are making concerted efforts to save more and spend less, and whether this affects housing lifestyles. Up until now, consumers have been spending money while still cutting down on debt, according to Standard & Poor’s economists. Consumers are becoming less scared and are starting to borrow and spend again, said S&P’s economists.
Response to government
Responding to encouragement from the central government to improve efficiency and raise capital, several of China’s leading state owned construction companies have already completed initial public offerings (IPOs) in 2009. Despite a brief scare in March 2009, when the Shanghai Stock Exchange plunged almost 10% in one day, investor interest in shares of construction companies is strong, thanks to the building boom in China and the government’s plan to finance huge infrastructure projects in the coming years. China Communications Construction Group Ltd., the largest harbor construction company in China and the world’s largest maker of container cranes, led the way. The sale was viewed as an unqualifiand oed success, with strong initial demand from investors and sustained price gains since the listing, and is encouraging other companies to go public.