In the last few decades, the Chinese economy has expanded dramatically, and China is now the second largest economy in the world. As a pillar industry, real estate made an unprecedented contribution in stimulating economic growth and increasing government revenue compared to other industries.
History of the Chinese real estate industry
The government of China first began real estate development in 1981. After the abandonment of a policy requiring government agencies and corporations provide permanent residence to their employees, the real estate industry officially entered a Golden Period. Moreover, to help real estate corporations pass through the economic crisis of 2008, new regulations were introduced by the government, as a result of which residence trading boomed and the real estate industry peaked. From 2008 to 2012, residence prices grew steadily, and from 2013 to 2015, owing to the austerity measures that the Chinese government introduced, the speed of real estate growth slowed down.
However, the real estate market awakened from its ‘down time’ in 2016. Sales in the first six months was 4,868.2b RMB – a 42.1% increase compared to other years. Currently the Chinese real estate market is still vital, even though the global economy is relatively down.
Urbanisation leading to massive consumer demand
China has the largest population in the world. This means consumer demand will not be satisfied easily. This demand can be divided into two parts – residence in urban area acquisition and residence improvement.
According to census data, China’s urban population totals 0.77 billion, or 56.1% of the population. By 2020 60% of Chinese will live in urban areas. There is no doubt the amount of residence acquisition will continue to increase, and provide more spaces for real estate market growth. As many people earn greater incomes, the satisfaction for residence improvement (mainly the satisfaction for average living space per person) also needs to be fulfilled in a short time. In most developed countries, the average living space for one individual is 387.36 to 667.12 square feet. The Chinese government is dedicated to providing the same, and based on primary estimate, this goal will be accomplished by the end of 2020.Click here to learn more.