【环球时代】北京外国语大学高翻考研复试材料Building excitement(视译)

Building excitement

Can China avoid a bubble?

THE property market illustrates the growing divergence between rich-world and emerging economies. In most developed countries (with a few exceptions, such as Australia and Canada) governments are trying to breathe life into property. In developing ones they are trying to cool things down. In the West the question is when prices will stop falling. In the East it is whether they will stop rising.

For many institutional investors, emerging markets, however buoyant, are not worth taking big bets on. Thanks to the bust, the rich world offers high-quality properties in liquid markets at lowish prices. The developing countries are a riskier development prospect, with new homes, offices and malls being built at speed to cope with fast-rising demand.

That demand is undoubtedly enormous. Brazil is thought to be short of some 8m homes; the whole of India has fewer hotel rooms than Las Vegas; in Saudi Arabia a long-awaited mortgage law is expected to kickstart a residential boom. Yet the pitfalls are also cavernous. Legal issues are one source of uncertainty. Investors complain that China’s system is capricious, for instance. “China will be one of the biggest property markets in the world in five years’ time,” says one b ig fund manager. “But if you put millions into a building in China and sell it, it is not clear that you will be able to take your money out.” Retail lenders express similar misgivings about the process for repossessing homes in developing markets.

The biggest worry of all is the rush of new supply. The pace of development is often frantic, nowhere more so than in China. According to Barclays Capital, more than 40% of the skyscrapers due for completion in the next six years will be in China, increasing the number of tall buildings in Chinese cities by more than half. Landscapes are changing in a matter of days. One of the more hypnotic items on YouTube is a time-lapse video of a 15-storey prefabricated hotel in Changsha being put up in just six days. “The range of outcomes in London and New York is pretty limited,” says one investor. “In Shenzhen you can be building a block of apartments with four others going up alongside.”

One way to manage the risk of oversupply is to take capital out of emerging markets as quickly as possible. ING’s real-estate asset-management arm (soon to be part of CBRE) works with local firms to build flats and homes for sale in markets such as China, enabling it to realise profits in two or three years. Another is to go for the less crowded parts of the market. Mr White of CBRE thinks that the logistics sector is one of the more promising avenues for foreign investors, in part because the market is dominated by a handful of global firms based in America. Shopping centres are another area where foreigners still have an edge over locals.

But many investors who have raised funds for deployment in emerging markets will have trouble finding a home for their money. One reason is that these markets are thin: there is very little buying and selling of existing properties. Another is competition from locals. Mainland Chinese developers are wildly optimistic because they have seen values rise, says David Ellis of Mayer