I read this article from Bloomberg:http://news.yahoo.com/s/nm/20100706/bs_ ... property_1
How will the chinese real estate collapse affect Peru?
Are we looking for much the same in Peru as property prices escalating.
China is much like Peru , a healthy economy with skyrocketing real estate prices, especially in Lima.
There have been numerous articles about China’s real estate bubble as it has became clear to almost everyone involved that prices will need to slow down drastically. As it was the case in the US, chances are good that this slowing down will end up being a major collapse. Even the Chinese government is being very active right now trying to cool this overheating market with some prices having increased by over 50% in 2009 at the same time US prices were cooling off. China’s government now demands a 50% down payment for purchases of land. “China is clearly in an asset bubble. It’s almost like it didn’t learn its lesson,” said Nariman Behravesh, chief economist for IHS Global Insight.How bad is it?
Prices in cities like Shanghai are out of control. Imagine this. Prices are estimated to be on average 27 times higher than the yearly income of its citizens, 5 times greater than the world overage. Also, the price to rent ratio, another clear number is now at 500!! So owners of property in a city like Shanghai better be very fortunate because they will not be able to rent out at a price even close to the necessary to pay off their mortgage
. There are 30 billion cube feet of commercial business under construction, a staggering number.