China's property market and the global economy

SOE related development and property investment companies are exempt from hukou restrictions.

Property degradation

Disposing of 64.5M vacant homes will take many years, during which time property will degrade and undermine the asking price.

Time is not the only factor that degrades vacant properties.

Poor building quality, materials and fit out, combine with insect, rodent and weed infestation in and around unoccupied buildings

Lack of maintenance creates serious problems in unoccupied buildings affecting systems control, security, lighting, lifts, heating and cooling. Potable water trapped in the piping system for prolonged periods will foul.

High acid rain levels, industrial pollutants and airborne particulates contaminate exposed external installations, foul water in non-operating air conditioning cooling towers, and corrode exposed structural metal works.

Owners and occupiers will face high insurance premiums to offset risk in vacant and/or sparsely populated buildings lacking appropriate maintenance and security.

Vacancy driven degradation can also degrade values of surrounding properties and the locality in general.

The growing inventory of current construction was excluded from the 64.5M estimate.

The commercial market faces similar problems in finding corporate lessees for the square kilometres of vacant and/or sparsely occupied buildings exhibiting signs of deterioration.

Based on current demand, analysts suggest reducing the unoccupied commercial space could take up to 15 years.

Depending upon the degradation rate of buildings and surroundings, selected projects are likely to be demolished on grounds including health, safety and bankruptcy.