China’s richest man, real-estate magnate Wang Jianlin (王健林), has warned the country’s property market is the “biggest bubble in history” — the latest alarm bell to be sounded on the world’s second-largest economy.
Wang, the owner of real estate and entertainment conglomerate Wanda Group Co (萬達集團), said property prices continue to rise in the country’s big cities, but fall in smaller ones saddled with huge inventories of unsold new homes.
“I don’t see a good solution to this problem,” Wang, whose group owns more than 200 malls, shopping complexes and luxury hotels across China, told CNN in comments published on its Web site. “The government has come up with all sorts of measures — limiting purchase or credit — but none have worked.”
China’s long property boom, driven by credit and government spending, made fortunes for many owners as new districts mushroomed across the country.
However, growth has hit the doldrums in the last two years, with new buyers priced out despite government borrowing restrictions reining in soaring costs.
Many more peripheral cities have become “ghost towns” full of empty and unsold residential property, even while in the larger metropolises property prices skyrocket.
Concerns about China’s growing debt mountain led a global central bank watchdog to earlier this month issue a warning that the country’s banking sector is facing an imminent crisis.
The Bank for International Settlements — dubbed the central bank of central banks — said a gauge of Chinese debt had hit a record-high in the first quarter of the year.
While Wang said he was not worried about a hard economic landing, “the problem is the economy has not bottomed out.”
“If we remove leverage too fast, the economy may suffer further. So we will have to wait until the economy is back on the track of rebounding — that is when we gradually reduce leverage and debts,” Wang said.
In recent years, Wang has shifted his company’s focus from property to services and the entertainment industry as profits wane in Chinese real estate.
Wanda is in talks to ramp up its push into Hollywood with the acquisition of Dick Clark Productions Inc, the company behind the Golden Globes, the US firm’s parent company said on Monday.
The move would follow Wanda’s high-profile, US$2.6 billion acquisition of US cinema chain AMC Entertainment Holdings Inc in 2012 and its US$3.5 billion purchase of Hollywood studio Legendary Entertainment LLC in January.
Nor would it be the company’s last. Wang told CNN that Wanda was waiting for the opportunity to buy one of the so-called “big six” studios, having already begun investing in movies produced by one of them — Sony Pictures Entertainment Motion Picture Group.
“If we want to buy something, our minimum would be 50 percent,” he said. “It could come in a year or two, or longer, but we have patience.”
His US film investments have raised eyebrows in the US, with lawmakers citing concerns that US cultural products might be censored or given a propaganda spin because of his close ties to the Chinese government.
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