China's once buoyant property market is facing some rough sailing. In fact, according to one tycoon -- Soho China Ltd's chief Pan Shiyi -- the real estate market is looking more like the Titanic headed in the direction of an iceberg.
曾经炙手可热的中国房地产市场正遭遇坎坷。据房地产大亨、SOHO中国(Soho China Ltd.)董事长潘石屹说，当前的房地产市场看起来更像是朝着冰山驶去的泰坦尼克号。
Mr. Pan, the co-founder and chairman of Soho China Ltd., is taking a very bearish view on the housing market, which has struggled this year. In the first four months of the year, home sales were down 9.9% from the same period a year ago in value terms, official data shows. New construction starts -- as calculated by area -- were down almost 25% year over year in the same period.
As if that's not bad enough, demand is also weakening in an expanding number of cities as banks tighten mortgage lending and sales are dampened by widespread expectations of price cuts.
'I think China's property market is like the Titanic and it will soon hit an iceberg in front of it,' Mr. Pan told a financial forum on Friday, according to the China Business News.
'After hitting the iceberg, the risks will not only be in the real estate sector. The bigger risk will be in the financial sector,' he added.
He said serious problems lie with financial products like trust and wealth management products, as well as entrusted loans that charge higher interest rates than banks and are key financing vehicles for the property sector.
'When housing prices fall 20% to 30%, these problems will be all exposed, ' he was quoted as saying.
Soho China declined to comment about Mr. Pan's remarks. But in a post on his verified Weibo account Monday, Mr. Pan said that during the forum's question and answer session, he had first asked whether there were any journalists present before replying to a question about the housing market. Only upon being told there were no reporters present, he said, did he proceed to answer.
'I didn't expect there are countless reporters hiding [in the audience], ' he said.
Soho has been putting at least some of its money where Mr. Pan's mouth is -- that is, by taking it out of the local property market.
In February, Soho China, run by Mr. Pan and his wife Zhang Xin, announced plans to sell all of their interest in Soho Hailun Plaza and Soho Jing'an Plaza in Shanghai for about 5.23 billion yuan ($853 million) to Financial Street Holdings, a Shenzhen-listed property developer.
今年2月份，由潘石屹和他的妻子张欣运营的SOHO中国宣布，计划将他们在上海SOHO海伦广场和静安广场的所有权益以大约人民币52.3亿元（合8.53亿美元）出售给深圳上市的房地产开发商金融街控股股份有限公司(Financial Street Holding Co., 简称：金融街)。
It isn't all bad news though for China's property market, and help may be on the way.
The central bank has instructed commercial banks to make mortgage lending a priority. Likewise, some local governments have taken steps to ease their curbs on home purchases, which were put in place when prices seemed to be soaring out of reach for most of China's 1.3 billion people. They've also eased restrictions on residency requirements and in some cases have rolled back curbs on buying a second or third home.
But these measures have been relatively modest so far and Beijing has not given the market a clear signal it can go back to its old speculative ways.
Though Mr. Pan didn't comment on the government's moves to soften property curbs, he did say he believes many forces -- including plans for a nationwide property registry, an expanded use of the property tax and more land for development as a result of rural land reform -- will help drive the market lower.
'I am not optimistic about China's property prices,' he said.
If a property specialist like Mr. Pan thinks the market is close to a Titantic moment, perhaps it's a good idea for buyers to stay close to the life boats.