Property market is strong, says Portman
Updated: 2011-07-04 08:11
By Langi Chiang and Koh Gui Qing (China Daily)
BEIJING - China's exuberant property market will not collapse, because prices are supported by brisk economic growth. However, there could be a bubble in the hotel sector, according to a US property developer.
Ambrish Baisiwala, chief executive of Portman Holdings LLC, said he is bullish on China's commercial and residential properties even though some investors believe there is a real estate bubble in the world's second-largest economy.
Baisiwala, who helped develop more than $30 billion worth of properties at the struggling Abu Dhabi developer Aldar Properties PJSC before joining Portman in 2006, said the US firm would like to expand in China.
"Overall, we don't see a bubble in China. But there are of course pockets of assets across specific cities where there may be an oversupply," he said. "We very much intend to quicken our pace in China."
The company is now looking at China's top cities, such as Beijing and Shanghai, as well as secondary cities including Xi'an, Wuhan and Nanjing.
He did not say if Portman would expand in China organically or through acquisitions, and declined to give further details.
Portman's China ambitions underline the difficulties the country faces in cooling its red-hot property market, where months of official clampdown have not dampened the mood among investors and developers, as seen at a real estate conference last week.
Many at the conference in Beijing were confident that China can sustain its solid pace of economic growth of about 9 percent over the next five years.
Baisiwala said there appears to be a bubble in China's hotel industry because the authorities were exacerbating an oversupply in the sector by encouraging developers to build even more. That has caused investment returns to drop, he said.
Beijing built hundreds of hotels in the run-up to the 2008 Olympics. Other cities such as Shenzhen and Guangzhou, which hosted the Asian Games last year, have also made a big push in their hospitality industries.
The overall fast growth in the property market has generated some waste, Baisiwala said. Some new residential and commercial buildings have to be redesigned, re-renovated, or sold at discounted prices due to poor planning or shoddy construction.
Portman, which has been in China since 1978, designs, constructs and manages an array of buildings, including residential and commercial blocks and hotels.
It has only invested in two projects with its own money: the Shanghai Centre which opened in 1989 and Portman House, a historical redevelopment of Shanghai's old French quarter, which will be completed in a few months.