China’s overhang of an estimated 28 million unsold property units following a building boom represents a “very real” problem its economy, a top fund manager said today at the Forbes Global CEO Conference being held here in Kuala Lumpur.
The Chinese surplus – which is about four times the number of unsold units on the market in the U.S. – will be more difficult to resolve because American real estate is more affordable for buyers, said Scott Minerd, managing partner and chief investment officer at Guggenheim Partners.
In the U.S., the ratio of the average home price to median income is only four to five times, compared with a higher multiple in China, Minerd said.
Reducing the overhang will be a “great challenge” facing China’ s government in the future, he said.
Minerd spoke on a panel session called “On the road to riches.”
China-related property stocks traded in the U.S. such as E-House and CRIC have dipped in the past year amid Chinese government efforts to slow inflation and real estate prices. Multinational real estate consultancies have expanded quickly in the country in the past decade to help Chinese companies manage property.
Real estate developers figured prominently on the new 2011 Forbes China Rich List published last Thursday.
The Forbes Global CEO Conference runs through the 14th. Attendees include executives from numerous U.S. companies including Dell, Google, Caesars Entertainment and Kohler.
The conference runs through Sept. 14.
