China’s property market has shown renewed signs of weakness recently, but long-term prospects are hardly uniform among different regions.
Oversupply will continue to be a big overhang for third- and fourth-tier cities, Dalian Wanda chairman Wang Jianlin told the Hong Kong Economic Journal.
The major problem with these small cities is the lack of population inflow, Wang pointed out.
For mid-tier cities, the average inventory level is less than one year’s sales volume, and that amount won’t be too difficult to absorb.
As for top-tier cities, it’s a far more upbeat story, he said.
The property tycoon predicts home prices to extend the uptrend for another two decades in these cities due to limited supply and continued population gain.
With more job opportunities and better public infrastructure such as education and healthcare system, large mainland cities have always been a magnet for people from small cities, towns and villages.
That’s the reason big cities are getting more densely populated and are the focus of corporate investment. The gap between small and big cities will therefore continue to widen.
Well-funded property developers will most likely keep bidding up land prices in first-tier cities, Wang added.
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