With guest speaker John van de Water of Next architects
The Chinese real estate market – what’s going on?
Last Monday (Dec. 11, 2023), we successfully held another enlightening session of the VNC China Café, the place where professionals who have much to do with China meet and share knowledge.
Under the headline “The Chinese real estate market – what’s going on?” our guest, John van de Water, founder and owner of Next Architecture in Beijing, was interviewed by Lilian Kranenburg of the China Café. He gave us a fascinating glimpse into the complicated world of architecture and real estate in this dynamic country.
John expertly navigated the current state of what he called the “Real Estate Winter.” Eye-opening statistics highlighted the challenges facing the country, such as the need to work 55 years to afford an apartment in Beijing. In Shanghai, the situation is not much different, with an average of 45 years of income needed to buy real estate.
John also shared insights into the measures the government is taking to manage the real estate developer crisis that is unfolding and could significantly derail the Chinese economy, as real estate accounts for 28% – 30% of China’s GDP (as opposed to the Netherlands, at about 7%).
John highlighted the government’s intention to complete up to 4 million homes (250 million square feet!) across the country that are under construction by developers in financial trouble. This initiative not only meets the need for housing, but is also crucial to supporting the economy.
At the end of August, the combined floor area of unsold homes stood at 648 million square feet, according to the latest data from the National Bureau of Statistics (NBS), representing 7.2 million homes, assuming an average home size of 90 square feet.
There was an interesting discussion about the accuracy of an even more extreme estimate by He Keng, 81, a former deputy chief of the Bureau of Statistics, who believes that the current number of vacant homes is “enough for 3 billion people.” Out of a population of 1.4 billion!
Whether the latter assessment is accurate or not, John made it abundantly clear that real transformation is needed to make the real estate market more sustainable, and he came up with an interesting and elegant solution: The “Plug-in House.” That would solve unaffordability for younger potential buyers while reusing many existing vacant buildings by creating smaller and mobile units that can be easily installed.
The session had us thinking about the future of real estate in China, the role of government initiatives and the potential for sustainable solutions to the huge vacancy rate.
Thank you to everyone who participated and contributed to this engaging discussion. And we hope to welcome you to our next session in 2024.
And, we said goodbye to Joke Bruynzeel, co-organizer of the China Café since 2011. We will miss her, but would love to see her back as a guest at the China Cafés.
