Spanish-like land bubble in China

Strangely, while the purchasing power of families was shrinking, that of the land buyers, the majority of which are state-owned enterprises, was lavishing relentlessly. The year 2009 spawned many “land kings,” companies that won land biddings with astoundingly high offerings. At least half of these land kings are affiliated with the central government. As a matter of fact, among the 129 state-owned companies, over 70 percent are involved in real estate, though only 16 are based primarily in the property industry. Chinese official media also admit that the colossal state-owned-enterprise cash has pumped up the price of housing. The land purchases are mostly speculative investments. Frequently, the buyers leave the land idle while waiting for the price to shoot up further. Hoarding has been so prevalent that the Chinese government has started to apply rigid rules to curb such behavior. In a contract on a US$3.7 billion land deal published in January this year, the government required that the buyer finish all construction work on the purchased land by the end of 2016, and stipulated that each extra day would cost the company one percent of the total land cost, and that the land would be confiscated without compensation if left idle for two years.