There are early signs of trouble in China, but the sky is not falling in yet, writes Christine Murray
Our story on a cooling property market in China, posted on TheAJ.co.uk last week, was initially met with incredulity from architects. A day later, Sky News ran a report on China’s speculative, uninhabited ‘ghost’ developments, including Ordos, where some of you have worked.
When we contacted architects for comment, it became clear that many of you had thought China’s property boom would never slow. Just last week, a small practice asked the AJ whether it was a good time to start an outpost in China. And why shouldn’t they, when the world’s most populous nation, and second largest economy, is expected to grow by 8.5% next year.
Since late 2010, however, the Chinese government has been taking initiatives to bring housing prices down and prevent a property bubble. This included raising deposits for first and second homebuyers, and refusing lending to third homebuyers and non-local investors. A new property tax was introduced in cities like Shanghai to eradicate non-occupier owners.
The restrictions have been effective (some say too effective); housing transactions fell by 25 per cent in the month from September to October, while property prices fell in 22 of 70 cities, according to government data.
The good news is that analysts are predicting a soft landing for the residential real-estate market, not a Dubai-style crash. If the price correction is isolated to the housing market, this will only impact architects who are engaged in private, speculative residential projects. Oasis, campus-style developments may also be at risk, if they are not aligned with market demands.
China is the biggest construction market in the world – a slow-down would be devastating to us all, not least the practices working there. That’s not currently happening, and there’s no sign of architect redundancies or bankrupt developers. There are early signs of trouble – practices are reporting projects being scaled back or returned to the drawing board, but only in the residential market. Ted Givens, design partner at Hong Kong-based 10 Design says the hotel and retail sectors remain promising, while David Roberts of Aedas Asia believes the outlook is still good for commercial, hospitality, civic, healthcare and education.
The hope is that government controls will prudently rein in the housing market, and ease monetary policies to boost credit. As for the masses of affordable housing the Chinese government is planning to deliver, PRP director Richard Tremeer warns that ‘the affordable work is going to local practices, and we are finding it difficult to compete with them on fees and deliverability’.
Wherever your practice has work, assessing the economic viability, market conditions and funding stream of a project is a good idea, as is invoicing promptly, chasing up payments and limiting speculative work.
As for China, even if its cooling market turns out to be a blip, it is not immune to the boom-and-bust economy. Nor is it a democratic nation; murmurs of a Jasmine Revolution, the sparks of which were doused by a police crackdown on activists earlier this year, hang in the air.