12 Feb 2024
Asian Century: China Property Collapse
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
This is expected to be the Asian Century given that half of the World’s population live in this region however China may not be as dominant as has been previously forecast for the following reasons.
Firstly, the One-Child Policy implemented between 1980 and 2015 to curb the country’s population growth will have dramatic negative impact on China’s working age population.
Secondly, the unfolding property collapse due to over building. Evergrande Group was China biggest property developer and has been ordered into liquidation by a Hong Kong court owing an estimated US$300 billion. Country Garden owes US$191 billion and is next with creditors applying for its liquidation.
This is a financial disaster for China which will cost in the trillions of dollars making it much larger than the 2008 Global Financial Crisis.
The World is currently holding its breath because financial markets do not know how to price this property collapse given China’s closed financial system.
The upside will likely be for buyers with large amounts of property being sold at fire sale prices.
Click to read.
Just remember, when asset prices fall due to some financial disaster, the outcome is always the same, investors are presented with an opportunity to buy more quality asset at a discounted price.
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