Pan Shiyi: China's Real Estate Market Is the Titanic and It Will Hit the Iceberg

Coverage from WSJ: Real Estate Tycoon Sees Titanic Moment for China’s Housing Market

My summary: His three reasons for weakness in the property market are registration system, real estate tax and land supply.

On the first, the registration system will reveal who owns property, so obviously a lot of hidden money will turn into cash. Even better if it becomes foreign cash.

On the second, in Beijing Pan knows people with 20, even 100 apartments, and not a one of them is rented. The real estate tax will push properties onto the market.

On the third, rural areas will now be allowed to sell and develop land with the same rights as cities, and even in Beijing this could bring a huge amount of supply into the market.

Pan also said the risk is not to the banks, but to the financial products (trusts, trust loans, third party WMPs). Developers are paying high interest rates and they are facing very tight credit markets. If home prices fall 20 to 30%, all the problems will be exposed.

潘石屹:中国的房地产是泰坦尼克号 就要撞到冰山了
"I'm not optimistic about the housing market, I think China's real estate is the Titanic, will soon hit the front of the iceberg. After hit, the risk is not only the real estate industry, the greater the financial risk of the industry. "May 23, in the Tsinghua University China Entrepreneurs Forum, SOHO China Co., Ltd., co-founder Pan Shiyi said.

As a real estate tycoon Pan Shiyi difficult to evade questions about the prices. "I am not optimistic about China's housing prices, despite the recent, real estate developers, academics, with a variety of economic theory to analyze, especially Ren as a representative, I think was in vain. market who do not believe these too. "he said. .

Then how to do? With the mind, go look at the market. This is the most real. Pan said that the market is more complex than the theory. I prefer to believe my eyes can see, they thought, in fact I believe more statistical data. Of course, these data from the National Bureau of Statistics is definitely not.

The reason bearish prices, Pan Shiyi analysis to three reasons. First, after the introduction of a unified real property registration regulations will increase the supply of the market. Prices will fall. "Engage in real estate registration, fool knows that the RMB will become some of the more subtle. Would rather replace sterling, U.S. dollars, the house can not be replaced."

Second, the real estate tax policy launch. Pan Shiyi said, now Beijing, to my knowledge, who has more than 20 sets of the house is there. Has 100 suites son who is also there. And these houses are not rented out. "If the introduction of property tax policy, has led to increased cost of ownership. Would urge these people, in the hands of the house into the supply market. Supply large quantity, then prices will fall."

Three is mentioned in the Third Plenary decided to allow rural collective construction land and operating state-owned land equal the market, with the right to the same price. Pan Shiyi example that Beijing CBD is four square kilometers, but rural construction land in Beijing has 1006 square kilometers, equivalent to more than 250 CBD. Therefore, the supply of land is very large.

In addition, Pan Shiyi also bluntly, if the real estate market problems, the weakest link is not bank loans. Bear the financial risk is greatest financial products.

"Trust, third-party financing, trust deposits, interest rates are high, the quality is poor, and developers are willing to go with such a high interest rate loans. Indeed, (their) money is very tight chain when prices fell 20 -30% of these issues out on all exposed. "Pan said.

Correspondingly, the beginning of this year, SOHO China Shanghai to sell two properties. Return of funds 5.23 billion yuan. Coupled with the previously Li Ka Shing "cash withdrawals" rumors, which caused the market nervous.

Pan Shiyi spoke frankly, which caused dissatisfaction among government officials. Only continue to apologize, saying that it is a rumor outside. We are optimistic about China, optimistic about China's future, optimistic about China's economic development. However, he did not say the last part, not optimistic about China's real estate.

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