www.ipropertyclassifieds.com

Chinese residential markets slowing overall with high-end and serviced apartment segments faring better

2011-12-13T22:41:00.000+08:00

Demand for serviced apartments has picked up as companies continue to grow their operations in China, said Savills in a recent report on the forecast of the China real estate market. The report further added that international companies are still cost conscious when it comes to budgets only increasing them as much as is necessary to maintain accommodation levels.

Although the market has largely been dominated by first-tier cities, increasing interest – especially for short term rentals – is being witnessed in second-tier markets. Growing interest from wealthy Chinese business men and women has been noted as they become increasingly mobile and look to enjoy the comforts of home on the road.

The report said a slowing residential sales market has encouraged landlords to place their units onto the leasing market and thereby increased supply and competition in the strata residential market. However, the residential leasing market should remain fairly stable going forward, with Shanghai remaining a focus for many international companies. The pace of growth in demand should be large enough to absorb a significant amount of the new supply coming to the market.

For residential sales, the report stated that government measures to cool the market continue to dampen demand from end-users and investors, as potential buyers take a wait-and-see attitude toward the market.
The slower market means developer finances have been hit by falling transaction volumes and a tighter monetary policy framework putting pressure on many to start lowering their asking prices and scale back their expansion plans, potentially resulting in a supply shortage two to three years down the road.

New supply is increasingly coming to decentralised locations as developable land is core locations becomes limited, metro networks expand and prices in downtown locations become increasingly unaffordable, said the report.

The government’s regulations designed to cool the residential market are having a bigger impact on the mass market than the high-end market as buyers in the high-end market require less less leverage, concluded the report.

China's Ordos property bust offers warning sign

2011-12-03T00:38:00.000+08:00

By Lucy Hornby and Langi Chiang

ORDOS, China | Fri Dec 2, 2011 8:03pm IST

(Reuters) - The monumental, neo-Mongolian sculptures, empty plazas and hulking concrete shells of buildings in Ordos district, deep in the steppes of Inner Mongolia, are a potent symbol of how China's property boom can turn to bust.

Off the back of a thriving coal industry, the local government has been building a new city for one million people called Kangbashi. It sits virtually empty and property prices are falling.

Even in the old city of Dongsheng where people live and work, some 45 minutes drive away, a wave of investment has backfired. Cranes sit idle over unfinished skyscrapers and migrant workers are fleeing.

The swing in fortune -- residents and property agents say prices have dropped by up to a third -- is a severe example of what is happening in cities across China, including Shanghai and Beijing.

After a housing bubble that doubled values in 35 cities between 2004 and 2009, prices are now falling nationwide. The central bank said on Friday property prices had reached a turning point while banks are worried a price slide of 20 percent could trigger panic selling.

"People are worried. Especially if they have bought two or three apartments," said Yu Mingjun, a worker sitting in a down jacket at a ramshackle office of a half-completed project in the old town.

Beside him, a colleague played video games while outside, the few construction workers left on site chatted over a card game.

"Actually I am worried too. I can't decide what to do. I'm thinking of leaving here."

Top Chinese leaders have vowed to keep in place measures aimed at clamping down on the country's property inflation until prices return to reasonable levels.

But prices in Ordos have already fallen below the level that analysts say would cause serious problems if mirrored nationally.

Prices have plummeted 20-30 percent in certain property developments in Beijing and Shanghai.

Nationwide, the decline is so far more modest. Home prices fell slightly in October from September for the first time this year, official data showed, but private surveys indicated prices began falling in September and continued through November.

With local governments often dependent on land sales to fund payments on a staggering 10.7 trillion yuan of debt, Beijing worries that a collapsing property market will trigger a wave of defaults that in turn will hit the banks.

"If society demonises the property sector, especially if buyers think prices will fall, creating a sharp cooling of for instance 30-40 percent, I think that's very serious," said Hui Jianqiang, head of research for consultancy E-House China.

More worrisome, the property market, which contributes about 10 percent of Chinese growth and drives activity in 50 other sectors, could drag the real economy to a hard landing.

A pair of purchasing managers' surveys last week showed China's factory output shrank in November to the lowest level in three years, feeding worries about whether Chinese growth can keep powering the global economy.

A "SENSITIVE" PLACE

In empty showrooms of Dongsheng, Ordos' old city, saleswomen immediately offer 30 percent price discounts if a buyer is willing to pay for a property upfront and in cash.

Chinese and foreign media seized on Ordos as the prime example of wasteful and pointless government projects after the government built the sprawling new city of Kangbashi.

Investors view ghost towns like Kangbashi as an example of the sort of excesses that could pull hard on the reins of the country's growth.

On Thursday, a policeman shooed a Reuters cameraman away from the Wenming ("Culture") property development right near government buildings in Kangbashi, as workers bearing shovels walked in to demand their last payment before heading home.

"Kangbashi is a sensitive place now," he said.

China cut its required reserve ratio for banks this week, thereby freeing up more cash for lending. Many interpreted that as a sign that China had swung towards easing, although it remains unwilling to cut interest rates.

"The RRR cut is not a timely enough rain to water the developers' drying cash flows. But it signals a policy change and could help boost market confidence," said Zhang Yue, research head of Home Link, a Chinese real estate consultancy.

Many analysts expect Beijing to keep property tightening steps in place, including curbing bank lending to developers. Worried about inflation and a speculative bubble, officials remain wary of relaxing policy.

But local governments may not be able to wait. As developers cut prices, they will see a drop in demand for land sales, which bulk up their budgets. Falling revenues will give them incentive to quietly loosen restrictions on property -- such as rules limiting the number of homes families can buy -- in their areas.

"China's severe tightening measures have already reined in property speculation. They have also hurt healthy demand for first homes and second homes for better living conditions," said

Jiao Qing, president of Beijing Zhongkun Investment Group, a Chinese developer.

"Just like driving, once you have braked hard and brought the car to a sudden standstill, it takes a while to restart the engine."

QUIET LOOSENING

Governments in Beijing, Wuhan, and Hangzhou -- all places with more natural demand than Ordos -- have issued policies to help the housing sector in the past two weeks.

In Ordos, the government announced a bailout fund of between 7.5 billion and 10 billion yuan to support its beleaguered developers.

Still, that may not be enough. A commercial real estate agent, who only gave his surname Li, said that despite the government actions he was planning to return to his native Guangdong Province after six unsuccessful months in Kangbashi.

"There isn't much commercial real estate here. You need private businesses for that, and here it's all government money."

If Beijing can manage to orchestrate an orderly pull back in prices, policymakers need look no further than Dongsheng as an example of the future of the property market.

Typical of Chinese provincial cities, many of its 600,000 residents live in trim, low brick buildings that are dark, cramped and indifferently heated.

Their demand for better housing is likely to sustain China's housing market for decades to come, as long as a hard landing doesn't wreck the economy. But in Dongsheng, the restaurants are already noticing that customers are drifting away.

"The decade of explosive growth in China's real estate industry has gone. Developers must think about a shift in their strategies now and aim for the long term," said Jiao, of Zhongkun Investment.

"China can undertake a home price cut of up to 30 percent. But I'm not sure about what will happen beyond that."

(Additional reporting by Jimmy Guan and Xiaoyi Shao in BEIJING and Royston Chan in Shanghai; Editing by Don Durfee and Neil Fullick)

BUSINESS

Modern Bungalow Designs @ Sentosa Cove, Singapore - for Reference Only

2011-11-24T17:43:00.000+08:00

Sime Darby’s Isola nearly sells out in a day

2011-11-23T18:58:00.000+08:00

Sime Darby Property Bhd put up for sale 115 units of its latest offering, Isola, which is located in the renowned and award winning township of Subang Jaya. By the close of business on the first day of the launch 85 units had been sold.

Isola is a freehold development, consisting of two 16 storey tower blocks that house 216 units of centrally located and quality apartments. The units vary in size from 95.04 square metres to 383.96 square metres. The cheapest unit is RM679.888 (US$214,050) according to The Sun Daily.

The popularity of the units did not go unnoticed by Group Chief Operating Officer Datuk Abd Wahab Maskan.

“As we track with optimism the property sector’s outlook for the coming year, Sime Darby is confident its products would continue to match market and consumers’ needs in terms of right prices and sales requirements,” he said

The House Design of Sentosa Cove, Singapore for Reference

2011-11-23T17:16:00.001+08:00

Building house on a small area in modern style isn’t as easy task as it could be. One more project by K2Ld Architects shows how to do that. It has everything modern house need: pool, open spaces around the house, 4 sides views from different rooms, a lot of big windows and transparency, marble floors, modern colored walls and so on. Although like other K2Ld houses it’s form differs from usual ones. It uses linear elements like others but they are accompanied by non-traditional elements. That all adds overall impression of uniqueness and diversity.

Read more: http://www.digsdigs.com/modern-house-at-small-area-in-sentosa-cove/#ixzz1eWCEen6n

The Design of the Newly Launched Bungalows in Klang Valley

2011-11-23T17:04:00.001+08:00

Avalon II, USJ Heights Bungalow

Built-up: 4979sf, Freehold, RM3.5Mil (Approximately RM703/sf)

The Park @ Bukit Serdang

(Launching Soon)

Price Comparison of Bungalow Houses near Bandar Mahkota Cheras as at 22/11/11

2011-11-22T18:36:00.005+08:00

The following are the selling prices of bungalow houses in Cheras within 3km radius from Bandar Mahkota Cheras as a guide for those who are sourcing for bungalows within the vicinity. The selling price for a brand new bungalow within this area is no less than RM500/sq.ft. and it's still far below P.J. and Kepong!

China property dip sparks bank fears

2011-11-22T00:43:00.001+08:00

By Simon Rabinovitch in Beijing

The number of property transactions in China’s largest cities has fallen to dangerously low levels, according to regulatory documents obtained by the Financial Times.

According to the documents, the China Banking Regulatory Commission earlier this year ordered domestic banks to weigh the impact of a 30 per cent decline in housing transactions in “stress tests” aimed at determining the health of the Chinese financial system.

While the government has been trying to rein in sky-high property prices, a Chinese real estate slump would have a significant ripple effect on the global economy. Property construction accounted for more than 13 per cent of China’s economy last year.

In April the CBRC told banks to test their loan books against a 50 per cent fall in prices, and also a 30 per cent fall in transaction volumes.

In October, however, property transactions fell 39 per cent year-on-year in China’s 15 biggest cities , according to government data. Nationwide, transactions dropped 11.6 per cent, accelerating from a 7 per cent fall in September.

The fall-off in transactions has affected developers’ cash flows and, in some cases, their ability to repay bank loans. Rising defaults after a lending surge in 2009 and 2010, much of which ended up in the property sector, were cited by the International Monetary Fund this month as one of the Chinese financial sector’s biggest risks.

The CBRC has not released the results and declined to comment. But one analyst who reviewed the stress-test documents said they did not take into account the impact that fewer transactions and lower property prices would have on bank collateral.

“If developers can’t sell property and local governments can’t sell land, it’s hard to see why banks would be any better at either task under such conditions,” the analyst said.

Chinese regulatory officials admit privately that the tests need to be improved. One senior official said banks were often unaware that loans to big state-owned enterprises had been funnelled to real estate subsidiaries, and acknowledged that the impact on collateral had not been fully taken into account.

The weaknesses in the Chinese scenarios echo earlier problems with stress testing in the European Union, where regulators underestimated the potential impact of a sovereign debt crisis.

The fear is that the impact of a bursting of the Chinese property bubble could yield a crisis just as dramatic as the one now unfolding in Europe. Rising defaults after a lending surge in 2009 and 2010, much of which ended up in the property sector, were flagged by the International Monetary Fund this month as one of the major risks hanging over the Chinese financial sector.

While Beijing’s campaign to cool the property market has had its intended effect, some analysts worry that the government has underestimated the impact its measures are having.

The measures, including higher downpayments and restrictions on home purchases, have taken nearly two years to gain traction. But the concern is that the government will have trouble shifting gears quickly to respond if necessary. The fall in the number of in buyers is also beginning to weigh on construction, which could deal a blow to the wider economy.

Those knock-on effects were barely tested in the stress analysis. Banks were told to catalogue a series of property-related loans: to developers, for mortgages and to upstream industries like cement and downstream industries like furnishings. But the methodology imagines that while house prices drop, overall economic growth remains more or less unimpaired.

“Before property prices drop 30 per cent, one needs to think how much sales are down and, more importantly, how much construction is down. Not only will that impact on steel and cement, but it also would mean a drop in industrial production, investment and jobs,” one analyst told the FT.

Another Newly Completed Commercial Property in Bandar Mahkota Cheras - Mahkota Square

2011-11-22T00:06:00.003+08:00

Mahkota Square, a stylish commercial project in Bandar Mahkota Cheras is now completed. It is located right next to Jusco. The original selling price was from RM1.47 million to RM3.3 million.

Visit the official site for more information.

http://mahkotasquare.com.my/

A Change of Perception of Today's Cheras

2011-11-21T13:24:00.000+08:00

Today's Cheras is totally different from the Cheras we used to know 10 years ago. The younger generations here now are much more knowledgeable in terms of buying houses. They know exactly what a nice house is. Simply a bare big house concept doesn't work in Cheras anymore. They want modern design, practical layout and also neighbourhood.

It's not an easy task to find such houses in Cheras at this juncture. The big developers know very well about this. That's why Dijaya, Mah Sing, IJM, Glomac, Mutiara Goodyear and Singapore's Lum Chang are here in Cheras and they are doing very well.

Bandar Mahkota Cheras is one of the up and coming townships in Cheras. We have received a lot of inquiries on bungalow houses in Bandar Mahkota Cheras but there are no supply at all. Old fashioned houses with small layout and low ceiling are not in favoured. No matter how you renovate it, you will never achieve what today's modern design can give you. Moreover, the renovation cost is so expensive nowadays.

The modern contemporary and minimalist design with single pitch roof, high ceiling and full height glass panels are the design they are looking for. This is the trend in Cheras today. Just take a look at the newly launched projects like One Lagenda by Mah Sing, Taming Mutiara 2 (by Tanming) and Eastpark 72 (by Lion). Also, take a look at the design of the multi-million house in Singapore's Sentosa Cove, then you know what we mean...

(Left) This is one of the old houses available in Cheras. Be prepared to spend couple of hundred thousand to renovate it. If you solely renovate it, you can also never achieve the high ceiling

effect as given by the new design unless you demolish it and rebuild. If so, it definitely will cost you more! (Below) This is one of the modern bungalow designs that are in demand now. A simple and neat design that give you a lot of natural lighting and comfort.

The Pearls @ Taming Mutiara 2, Sungai Long near Bandar Mahkota Cheras

2011-11-20T23:27:00.002+08:00

The Pearl is a 3-storey bungalow in Sungai Long developed by Tanming. Freehold, built-up from 7,020 to 14,935sf, selling RM3.38Mil onwards. Expected completion in March 2013.

Special features :
Low Density with only 3.8 units per acre

7 Spacious Bedrooms with En-Suite Bathrooms (A Large Room of 650 sq. ft. can be used for Home Theater / Gymnasium / Dance Hall)

Another Room of 363 sq. ft. for Children Playroom / AV / Computer / Library

A Large Family Hall of 375 sq. ft. at the First Floor

A Powder Room

Large Covered Car Porch for 4 Cars

Perimeter Fencing with 24-Hours Guarded Security

Landscaped 50 feet Road

Lusciously Landscaped Garden

Alarm System

Automatic Gate System

Solar Heater System

3 Phase Power Supply

Concealed Underground Cables & Covered Drains

Another Exclusive Project in Bandar Mahkota Cheras - EastPark 72

2011-11-20T23:16:00.001+08:00

EastPark 72 – Elevating living in Cheras

It is not every day that a new residential development is able to elevate the appeal of a whole township. EastPark 72, an enclave of 72 homes in Bandar Mahkota Cheras ranks amongst the few. This prestigious new development by Narajaya Sdn Bhd, a subsidiary of The Lion Group promises to impress even the most discerning urbanite with its sleek, contemporary design, functional features and an array of facilities that places it on par with more established addresses in Damansara and Ampang.

Designed To Celebrate Luxury And Space

Luxury and space have found the perfect marriage in the 3-designs of this 40ft x 80ft, 2½ storey semi-D homes. From each design’s ultra-modern façade that showcases clean lines to its large, open living area that extends seamlessly into the dining and kitchen spaces, it takes pride in celebrating the art of fine living. It’s a home in which one will enjoy entertaining family and friends as it allows for an easy flow of movement without the limitation of unnecessary walls. For a more conducive living and entertaining environment, air conditioning units to service the 1st floor of the home are provided.

The spatial experience reaches new heights in a EastPark 72 home with its plaster ceiling finishes as well as a double-volume foyer and staircase which is housed within a tempered glass railing and leads to the upper floors of the home. Like the lower floor, space and luxury continue to dominate the more private living spaces of the home. Each of its bedrooms except for the guest room has en-suite bathroom while every bedroom is air-conditioned (except for the maid’s room). The walk-in wardrobes in the master bedroom and the 1st bedroom bear testimony to the priority given to luxury, space and comfort in the design of this home. The bathrooms too with the exception of the powder room feature individual hot water storage systems and tempered glass shower enclosures.

The 300-sq foot roof garden is yet another feature of this home that will appeal to most urbanites. It provides a much needed nook of paradise, perfect for a private evening respite for the busy city dweller.

An Integration To Leverage An Established Township

Sprawling 9.7 acres across hilly slopes while being close to the full infrastructure and amenities of Bandar Mahkota Cheras, the well-planned and established thriving township enjoys good accessibility via the SILK highway and Jalan Cheras.

The subtle yet aesthetically impactful integration of EastPark 72 into Bandar Mahkota Cheras is visible in its lush landscaping and paved walkways made possible by its underground cabling. This pedestrian friendly residence is Bandar Mahkota Cheras’ first guarded community offering a 3-tiered security system consisting of 24-hour security at guardhouse with direct Intercom system, Closed Circuit TV (CCTV) on Perimeter Fencing and a built-in alarm system for each home.

Well-aligned with the aspirations of a contemporary community to promote the sustainability of a green environment, EastPark 72 is also home to a nature-inspired 1- acre designer Green Park which includes a playground complete with a man-made slide that weaves its length along the contours of the park’s terrain. The tree house within the park is sure to bring much joy to children as would the in-built par course to fitness enthusiasts within the community.

The freehold development offers residents the serenity and privacy of a premier city enclave with business, education and leisure facilities conveniently located in its vicinity. Mahkota Commercial Centre with AmBank and Hong Leong Bank amongst its tenants, Jusco Mahkota Cheras Shopping Mall, Carrefour Hypermarket as well as a selection of food and beverage outlets are within a short distance away.

Targeted to be completed in February 2013, the project which was only launched in March this year has enjoyed brisk sales spurred by the homes’ large built-up of 4,276 sq feet. Kindly call the exclusive marketing agents from Big House at 014-218 9822 (Catherine Chin) / 016-202 2446 (Mooi) OR 03-9075 2288 / 03-9074 9206 (Bandar Mahkota Cheras Sales Gallery) for the latest promotional packages.

Tropicana Cheras, Luxury Semi D and Bungalows near Bandar Mahkota Cheras

2011-11-20T20:32:00.002+08:00

Tropicana Cheras is a new luxury property development by Dijaya at the township of Cheras. The project is a mixture of exclusive semi detached homes and new bungalows. The property is a luxurious lifestyle haven cradled in an exclusive guarded enclave. A majestic entrance statement stands to greet your arrival every time, as you pleasantly enter a lushly landscaped neighbourhood. All complete with pocket gardens and relaxing green parks. Children play and laugh at a playground, while their parents catch up with the latest at a nearby gazebo. This picture perfect setting is punctuated by the contemporary styling of sleek, modern homes.

Each home offers luxurious large interior space, giving homeowners the opportunity to express their individual styling touches. To add finesse to these luxury homes, every room is complete with an en-suite bathroom, while the master bedroom on the second floor boasts a sky shower. A spacious stairwell that leads up to a skylight welcomes in the sunlight and flooding the inside of the house with delightful warmth. These wonderful desgiend homes are integrated with home alarm system and complemented by 24 hour guard patrols.

Name: Tropicana Cheras

Country: Malaysia

Location: Cheras, Kuala Lumpur

Property Type: Semi Detached homes and new bungalows

Tenure: Freehold

Total units: Semi D (66 units,), Bungalow (22 units)

Semi D: Build Up (3,899 sqft) Price: RM 1,750,000 – RM 2,020,000

Zero Lot: Build Up (4,673 sqft) Price: RM 2,050,000 – RM 2,300,000

Developer: Dijaya Corporation Bhd

Expected date of completion: June 2013

JUSCO - the main crowd puller of Bandar Mahkota Cheras

2011-11-20T19:21:00.000+08:00

Jusco is one of the main crowd pullers of Bandar Mahkota Cheras besides the successful opening of the main Bandar Mahkota Cheras access road by MPKJ, after the strong protest by PKR.

Ever since Jusco is opened, Hong Leong Bank immediately opened their next Cheras branch in Bandar Mahkota Cheras located right opposite Jusco and become the second bank in Bandar Mahkota Cheras after Ambank.

Subsequent to that, Mahkota Walk, the commercial center of Bandar Mahkota Cheras enjoy 100% appreciation on the property value, from RM900K to RM1.8Mil for a 4-Storey Shop-lot!

There is a huge difference in Bandar Mahkota Cheras. See it yourself if you have not been to Bandar Mahkota Cheras for a while. You can find almost everything in Bandar Mahkota Cheras now!

One Lagenda near Bandar Mahkota Cheras - The Award Winning Project developed by Mah Sing Group

2011-11-20T00:16:00.002+08:00

Bungalow Designs in Ara Damansara by Sime Darby Property (For Reference Only)

2011-11-19T18:18:00.001+08:00

Bungalow Designs in Setia Eco-Park For Reference

2011-11-19T18:00:00.000+08:00

Simple Contemporary Open Design

2011-11-18T20:14:00.000+08:00

Modern Interior - Colourful Home

2011-11-18T20:01:00.000+08:00

Minimalist Design - The Trend of Double Volume & Glass Railing

2011-11-18T19:45:00.001+08:00

Today's Bungalow Designs - The Minimalist Design

2011-11-15T22:51:00.000+08:00

Oversupply threatens Malaysian property market

2011-11-15T18:50:00.000+08:00

Supply of office space, or rather the over-abundance of it, is making market observers in the property sector cautious as a new line of mixed-use mammoth developments hit the market.

Think tanks who have crunched the data are already sending out warning signs, despite assurances by the government that the situation is under control.

Among the projects are the KL Metropolis by developer Naza TTDI Sdn Bhd who will add several million square feet of office, retail and residential space although occupancy rate for prime offices in Kuala Lumpur linger around 60-87 per cent.

Excluding the large-scale projects in the pipeline, a total of 6.69mn sq ft of new office space will be completed in Kuala Lumpur by 2015.

Property prices forcing young Singaporeans to look at new locations

2011-11-09T18:56:00.000+08:00

Singaporeans are starting to look further afield when it comes to buying property and the new popular location is Johor, Malaysia. The waiting time for a Singaporean to get into public housing and high prices in the secondary market are the main reasons for the shift to Johor. The certificate of entitlement required to purchase property in the secondary market in Singapore is too expensive for a lot of young Singaporeans, and it can take up to three years to get into public housing according to The Sun Daily.

Johor offers the young Singaporean a lower cost of living and lower cost of housing. Property prices in Singapore continue to increase but supply is low. Local and permanent residents of Singapore are buying property in Johor and commuting to work.

Institute of estate agents of Singapore immediate past president Jeff Foo believes the government is trying to help young home owners but it will take time.

“The government is working to provide more properties for young people, but we will only see the effect in several years’ time,” he said.

Malaysian property show targets wealthy Indonesians

2011-11-09T18:52:00.000+08:00

Malaysia Property Incorporated (MPI) will feature real estate projects from its most established developers at the upcoming property show, held at the Grand Hyatt Jakarta between November 12-13.

The event will showcase recent developments from Dijaya Corporation Bhd, 101 Properties Bhd and Land & General Bhd among others. Property Talk International will co-host the two-day event and will serve as a platform to give visitors an overview of the property investment options.

The show hopes to attract affluent Indonesians who are likely to invest in strategically located neighboring countries like Malaysia. Since overseas investors are buying property for their children who are pursuing education in Malaysia or as a holiday home, the show will also provide information about education opportunities and the benefits of Malaysia My Second Home programme.

Property Prices Collapse in China. Is This a Crash?

2011-11-08T23:29:00.000+08:00

6th Nov 2011, forbes

Residential property prices are in freefall in China as developers race to meet revenue targets for the year in a quickly deteriorating market. The country’s largest builders began discounting homes in Shanghai, Beijing, and Shenzhen in recent weeks, and the trend has now spread to second- and third-tier cities such as Hangzhou, Hefei, and Chongqing. In Chongqing, for instance, Hong Kong-based Hutchison Whampoa cut asking prices 32% at its Cape Coral project. “The price war has begun,” said Alan Chiang Sheung-lai of property consultant DTZ to the South China Morning Post.

What started slowly in September turned into a rout by the middle of last month—normally a good period for sales—when Shanghai developers started to slash asking prices. Analysts then expected falling property values to move Premier Wen Jiabao to relax tightening measures, such as increases in mortgage rates and prohibitions on second-home purchases, intended to cool the market.
They were wrong. After a State Council meeting on October 29, Mr. Wen affirmed his policy, stating that local authorities should continue to “strictly implement the central government’s real estate policies in the coming months to let citizens see the results of the curbs.” Then, the selling began in earnest as “desperate” developers competed among themselves to unload inventory. One builder—Excellence Group—even said it would sell flats in Huizhou at its development cost.

Citi’s Oscar Choi believes prices will decline another 10% next year, but that’s a conservative estimate. Even state-funded experts are more pessimistic. For example, Cao Jianhai of the prestigious Chinese Academy of Social Sciences sees price cuts of 50% on homes if the government continues its cooling measures.

When Beijing’s pet analysts are saying prices could halve in a few months, we can be sure they are thinking the eventual sell-off will be worse. In any event, the markets are bracing for trouble. Investors are dumping both the bonds and the shares of Chinese developers, and legendary bear Jim Chanos, citing the property market, late last month said he is still not covering his short positions on China.

One does not have to agree that China will be “Dubai times 1,000—or worse”—Chanos’s memorable phrase—to understand that the unwinding of “the biggest housing bubble ever created” will be especially painful. Analysts have great confidence in Beijing’s technocrats because they managed to continue to manufacture growth through the global downturn, but most of us seem to forget that the Chinese, through massive stimulus, created even bigger challenges for themselves. At the moment, Beijing has yet to resolve two intractable problems: persistent inflation and artificially high property prices.

The dominant narrative at the moment is that China’s economic managers will skillfully deflate the property bubble and land the economy softly. As Time observes, “Many observers say a sharp economic decline won’t be permitted to happen before the change of leadership in 2012.”

Won’t be permitted? It is true that Beijing’s technocrats have had the advantage of working in a semi-closed system that has allowed them to use the considerable resources of the state to achieve outcomes not possible in freer economies. Nonetheless, they can continue to do so—in other words, defy economic principles—only as long as market participants—in this case builders, local officials, and homeowners—cooperate.

The last four weeks, however, must have been a sobering period for Premier Wen, and not only because developers began to lose their nerve. For one thing, recent purchasers have taken to the streets because they had suffered losses even before taking possession of their homes. A crowd of about 300 people in Shanghai smashed windows at the sales office of Longfor Properties on October 22, two days after the builder had ended a sales promotion on a project. The protestors had bought properties in earlier phases of the same project at prices as much as 30% higher than the discounted ones.

And then, on the 23rd, a smaller crowd—on the same street—demonstrated against another developer, Greenland Group. Protesters were injured in Shanghai at another demonstration, this time against a unit of China Overseas Holdings. There were also protests against builders in Beijing and in other cities, Hangzhou and Nanjing.

The cities of Hangzhou and Hefei have reportedly told developers to limit discounts to 20% to avoid unrest, but the attempt to establish fiat prices will not work for long because many builders face insolvency.

Moreover, Premier Wen has to be concerned that sometimes he cannot control his own cities, which have flouted his decrees by removing curbs on property ownership. Nanjing defied Beijing and relaxed mortgage rules, as did Anhui province. At least in Foshan, a city in Guangdong, central authorities apparently convinced local leaders to rescind their earlier decision to scrap centrally mandated curbs.

The overriding reality is that, because of Beijing’s stimulus spending, there are too many properties and not enough buyers at this time. The market will have to arrive at equilibrium at some point, but what is surprising is the rapidity at which this is now happening. In common parlance, it’s called a crash.