SHANGHAI—Indications that China is entering a recession are becoming more apparent with an estimated 50,000 acres of vacant dwellings in the real estate market. This figure is equivalent to 600 billion yuan (US$86 billion) of stalled capital.
According to the Business Report in 21st Century, Ren Zhiqiang, chairman of Huayuan Group, said that if the sales continue to slow this year, the vacant rate of commercial apartments would run between 37,000 to 50,000 acres of floor space.
In the report, president of China Real Estate Chamber of Commerce Nie Meisheng estimated the overstocking capital of the vacancies is about US$86 billion based on the average rate of 3000 yuan per square meter (US$360/yard square) nationally.
Facing the downturn of housing market and shrinkage of liquid capital, Ren advocated that the authorities needed to come up with plans to stimulate the housing market. The plans have to be stronger than those implemented during the 1998 Asian Economic Crisis mainly because China is facing the highest vacancy rate in history, according to the report.
The report also said that the latest number from the National Bureau of Statistics shows the vacancy rate of commercial apartments at the end of October 2008 was 32,800 acres, a 13.1 percent increase from last year.
The China International Capital Co. stated in its recent report on the 2009 macro-economy that under the current amount of trade, it would take 27 months to digest the vacant commercial apartments in 15 major cities in China including Beijing, Shanghai, Shenzhen, Xiamen, Nanjing, Hangzhou, Chongqing, and Harbin.
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