Q: There are many recent articles warning that there is a real estate bubble in China and that the Chinese market is ready to crash. Is now a good time to explore design and construction opportunities?

A: Whenever and wherever there are dire warnings concerning real estate bubbles in markets, all design and construction professionals should take a closer look and China is no different. Our real estate development work in mainland China has been closely followed by predications of real estate downturns for over 8 years now. Because China is affected by different micro and macro socio-economic conditions and elements, Western measurements that are usually correct for forecasting downturns and upturns in real estate markets in Western markets are not as accurate in China.

A case in point is the move made by the Central Government in March 2005 to put strict limits on government investment in capital projects. This move by the government to “turn off the faucet” of capital for real estate projects should have slowed the real estate market down. And using Western measurements, many real estate prognosticators in the US, UK and elsewhere predicted a severe downturn for China real estate. Instead, the China market has continued to grow even quicker and more robust since March 2005 through private and foreign investment.

As with all remote real estate markets, it is always a good idea to keep abreast of the macro and micro economic conditions and situations, but be sure to take a large grain of salt with news about China as it is a developing market with many more elements that assist its growth than traditional Western markets.

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