ECONOMISTS and executives taking part in the Boao Forum for Asia have highlighted the uncertainties of China's real estate industry, which they said might experience a rational cooling at best or a painful reshuffle this year.
Many agreed 2008 would not be a quiet year for China's property industry, even though the US subprime crisis would hardly deal serious blows to the domestic real estate market.
Government data had projected a slowdown in the rise of property prices since January, with price declines registered in some cities.
In Shenzhen in southern Guangdong Province, developers who used to buy up land suddenly stopped buying in spring.
Pan Shiyi, chairman of property developer SOHO China, attributed the caution to a strained cash flow during a real estate discussion on the sidelines of the Boao Forum for Asia 2008 in Hainan Province.
Rising interest rates and tougher bank loans under tight monetary policy imposed late last year, together with rising costs for raw materials, labor and land, had squeezed the profits of the real estate industry, he said.
China's four largest listed developers - Vanke, China Merchants Property Development, Gemdale and Poly - all reported a five-year low in cash flow from operating costs per share in their 2007 financial reports.
"Money has become the top problem plaguing the capital-intensive real estate industry this year," Pan said.
But Ren Zhiqiang, president of the Beijing-based Huayuan Group, said he would rather take a long-term perspective. "So long as the fundamentals of the Chinese economy remain undisrupted, property prices will rise soon or later," he said.
Chen Huai, dean of the policy research office of the ministry of housing and urban-rural construction, also denied the country's real estate sector was in the trough.
"The process of urbanization in China is a long-term strategy that will last 20 to 30 years. It will not easily be affected by individual events such as the US subprime crisis and the Olympic Games."