The china's economy slowdown is likely to continue for next three years, predict real-estate developers. The robust growth has led cities to emerge as major infrastructure built up ones. There's opportunity in smaller cities though they can't offer the kind of growth witnessed in cities like Beijing and Shanghai.
The Chinese real estate, construction and infrastructure segments had been the growth engines for the world's second largest economy for decades. Now, the economy is slowing down. This slowdown is likely to continue, feel the real-estate developers. After witnessing robust growth in real estate and construction sectors for over 20 years, the major cities have already been built up, now, there's room in small cities, according to Zhang Xin, CEO, Soho China. The scale of operations wouldn't be as big as in the first and tier-II cities. The slowdown may last for another two or three years, he predicted.
The high rate of development in construction and real estate sectors has resulted in robust urbanization in China for over two decades. After reaching to a level of urbanization, though it's not saturation, major cities have been built up and leave less scope than it used to be earlier.
The open land availability in major cities like Shanghai, Beijing and Shenzhen is very less. One can't see any major construction activity in these cities. No more cranes, cement concrete mixing machines, construction workers, nothing. This confirms the slowdown in China particularly major cities.
With an objective of speeding up the slowing real estate sector, the Chinese government has recently relaxed norms on foreign investments. The Yuan depreciation has eroded the attractiveness of property sector, fell the real-estate experts.
As part of the new norms, Chinese units of foreign companies and foreigners, who're working in China, can buy properties in the domestic market. The buying activity of foreigners is still very low in Chinese property market. Non-Chinese homebuyers account for a mere 0.5 percent of transactions in Shanghai in 2014, according to a latest data.
Though China's slowing down, still it's growing at seven percent, which is very optimistic when compared with other major economies, say economists. Growing in the range of 6-7 percent is not a very dark place as some economists warn the investors.
Chinese economy slowdown will also impact American investments as well. There's a tendency in investment pattern that when China becomes nervous, US investors tend to invest money abroad.
Since all the major cities have been pretty built up, suddenly the Chinese government can't create another city for carry forward the construction boom. The Chinese government had been able to construct and develop cities rapidly boosting the overall economy at a high growth rate.
Beijing-Tianjin-Hebei cluster is an emerging opportunity for construction activity in the near future. But, it's too early to confirm as Beijing government is planning to push the lower end out of the city.
For instance, undergraduate universities are moving outside of the ring road. The lower end and low-income people find it difficult to stay in Beijing city. Many migrant workers were staying in the basement of buildings. The construction activity is becoming very low and leaving lesser work opportunities for workers are driving them out of the city.
On the other hand, while collar people are coming to Beijing very easily as increased job opportunities for them. The visa norms are also relaxed for foreigners. Beijing is fast becoming more cosmopolitan.
Hosting international events such as Olympics, global expo would also boost infrastructure facilities in cities like Beijing and Shanghai. Chinese construction companies are known for their abilities to meet the deadline.
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