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It seems that such world-class extravaganzas like the Olympics, World Expo and F1 Racing will bring great business opportunities for the country. But as housing prices in Beijing and Shanghai keep soaring, experts warn the property fever may lead to bubbles in the real estate market and say it should be cooled down.
Beijing's real estate sector now is one of the most lucrative markets in China. The industry has been heated up by the capital's successful bid for the 2008 Olympic Games.
Shanghai is in a similar situation as it prepares to host the 2010 World Expo. Investors and land developers from China and abroad are driving up real estate prices as they bet on further price hikes.
Experts say the two cities should be cautious against bubbles in the real estate sector. Meng Xiaosu is chairman of the China National Real Estate Development Group, China's largest state-owned property developer.
"The real estate industry will face great business opportunities and huge challenges in Beijing and Shanghai. For example, in Beijing the land price has been escalating and there is now a deluge of luxurious apartments and commercial buildings. Vicious competition may be ahead."
He warns that continual rises in real estate prices could eventually lead to oversupply and panic selling.
"For example, after Sydney hosted the 2000 Olympic Games, the city's real estate developers had to face a diving house price and declining sales. So Beijing and Shanghai should learn the experience and lessons from other countries and make a careful plan of infrastructure construction and better regulate the real estate market."
Last year Shanghai surpassed Beijing to become the country's most expensive housing market when its average price per square meter surged more than 29 percent.
To cool down the market and avoid bubbles, the city government stepped in and introduced new rules earlier this year to prevent investors from selling houses under construction. As well, the city tightened regulations on mortgage loans.
Meanwhile, experts also suggest home buyers make careful choices and try not to be too influenced by promotional hype from real estate developers.
(CRI June 9, 2004)
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