In China, Real Estate Fever is Rising
China’s real estate rush, once confined to a handful of leading cities, has spilled into the hinterlands with a ferocity reminiscent of American expansion into exurbs like the Inland Empire.
In a country that economists say is treading dangerously close to a full-blown property bubble, Hefei represents more evidence of China’s headlong embrace of housing to power economic growth.
“The situation in Hefei is a symbol of the craziness in China’s real estate market,” said Cao Jianhai, a professor of economics at the Chinese Academy of Social Sciences, a government think tank. “Prices in second- and third-tier cities are increasing more dramatically than in the first tier. It’s very dangerous and it puts local banks at risk.”
With land increasingly difficult to secure in the most coveted cities, developers are turning to lesser-known destinations in China. Local officials eager to generate revenue through leases and development fees, and to meet growth targets set by the central government, are quick to grant permits.