Shanghai real estate in HUGE HUGE HUGE bubble

What is your position right now? I happen to agree with your story that China is the bubble. But how do you trade this? Being short US stocks is a different story...

 

Being short implies u know when the bubble busts. We small

fish do not know, and it's uber risky to try.(Except when it's

already falling, and u start to short but don't capture it at it's peak.)

On the other hand, a far safer bet is to long stocks and index

futures if and after the bubble busts and stocks fall significantly like

in march,(though you might not get the absolute bottom, you can

average down.)

Hopes this helps you.

 

There are some Mainland China based property developers listed in Hong Kong. If you think that is a bubble, you may short them. (AFAIK, IB launched the short selling of HK stocks service a few months ago). In 2007-2008, a lot of mainland china property developers dropped 80%. But... the most important thing is *timing*

 

that's excatly what I said 3 poster.

 

sorry... didn't read your posts thoroughly

 

just shorting the FXI will just be fine.

 

China to Limit Credit for Home Purchases to Counter Speculation
January 05, 2010, 10:23 PM EST


Jan. 6 (Bloomberg) -- China’s government said it will curb credit for home purchases to reduce speculation and rein in surging real-estate prices.
The nation will “further restrict credit for the purchase of second homes and curb speculative housing investments,” Jiang Weixin, the housing minister, said in a statement on the ministry’s Web site today. He didn’t elaborate.
Premier Wen Jiabao pledged Dec. 27 to tackle “excessive” property-price gains in some cities. Prices across 70 cities rose at the fastest pace in 16 months in November, amid concern that record lending and inflows of capital from abroad are creating asset bubbles in the world’s third-biggest economy.
“They are trying to prevent a full-blown bubble,” said Lee Wee Liat, a Hong Kong-based property analyst at Nomura International Hong Kong Ltd. Lee sees potential bubbles in real estate in cities including Beijing, Shanghai, Shenzhen and Guangzhou.
Jiang’s statement, after an annual work meeting by the ministry, said China will add to stocks of low-cost housing in cities with high prices. The government will also crack down on property hoarding by developers and fake pricing and sales, and ensure that housing demolition is legal, he said.
China may raise downpayment requirements for purchases of second homes to 50 percent, Beijing Business Today reported Dec. 21, citing an unidentified person. The current level is 40 percent, the newspaper said.
Local governments are already tightening property rules.
In Shanghai, home buyers must prove they are first-time purchasers before benefiting from a reduced deed tax on property transactions, the city government said Dec. 31. People buying second homes must show their existing living space is smaller than the city’s average to qualify for a minimum 20 percent down payment and a 30 percent discount on mortgage interest rates, the government said.

 

Even they notice the bubble, how come all these money managers aren't saying how inflated their real estate market is. People keep pouring money into these markets as if they can do no wrong.


China vows to keep "hot money" out of property market
REUTERS_|_January 10, 2010_|_2:01 AM EST
BEIJING (Reuters) - China vowed on Sunday not to let foreign speculative investment affect the property market, the latest expression of official concern that real-estate prices are racing ahead too fast.

The directive from the State Council, China's cabinet, will serve as a guideline for local authorities and ministries, including the People's Bank of China and the China Banking Regulatory Commission, to work out detailed policies.

"Relevant departments must enhance monitoring of loans and cross-border investment to prevent illegal inflows of capital into the property market and to avoid the impact of overseas hot money on China's real-estate market," the cabinet said.

It said the central bank and banking regulator should step up oversight and "window guidance" of mortgage lending.

About one-sixth of China's nearly 10 trillion yuan ($1.5 trillion) in new loans last year flowed into the property sector.

Concerned that a property bubble could stir social and economic instability, Beijing has vowed to combat overly fast price increases, although its moves to date, such as restricting sales tax exemptions, have been relatively mild.

The cabinet urged local authorities, especially in cities where housing prices are rising sharply, to increase the supply of affordable housing.

It reiterated that it would curb house buying for "investment and speculation purposes" and keep the minimum down payment for purchases of second homes at 40 percent.

China's central bank said this week that it would pay particularly close attention to the property market in 2010 while managing inflationary expectations.

 

The situation is even more extreme in Shanghai than Beijing.

Last month, at Forbes Park estate in Shanghai’


Gubei area, a 700 sq metre villa was sold to an anonymous buyer for 190,000 yuan per sq metre. This is a record price in China’s financial capital and nearly double the previous record, an apartment at Tomson Riviera apartments in the Lujiazui financial centre of Pudong district.

“The units are too expensive for most Chinese, but not for those who are used to luxury accommodation and high living overseas,” Xue Jianxiong, an analyst with E-House (China), told the China Daily newspaper.

And he pointed to prices in Hong Kong of 800,000 yuan per sq metre as a sign that the luxury market in China still has a way to go.


“Compared with upscale housing in cosmopolitan cities around the world, there is upwards potential,” he said.


http://www.thenational.ae/apps/pbcs.dll/article?AID=/20100109/BUSINESS/701099956/1005/business

 

so, could I ask what qualifies you to speak about this issue? Do you work in China? Do you live in China? What else do you know other than what every kid can read on free websites, written by analyst who are paid to write rather than being right?

Of course will the real estate market cool off at some point but certainly not now, or have you heard of people panicking and trying to sell their 2nd or 3rd homes? I have not...

A sell off could initiate at a level 30-50-100 % higher than current levels.

My point is, there is zero evidence that we should even discuss this right now. I never understand people who position themselves to trade against a strong trend, who desperately attempt to throw themselves against a running train.

By the way, I live here in Shanghai 1/3 of the year, I rend an office here and am located the other times in another Asian city. I do not own any properties here in Shanghai, hence, do not talk my book. But at least I am at a close enough proximity to this market to say that so far nobody is thinking of cashing in. I am not sure what experience you have in Shanghai, should you have any then I highly question your sense of this market.

Anything you want to add other than pasting more of this worthless crap?