China’s efforts to cool the economy make it harder for the country’s millionaires and billionaires to spend their capital, writes Shaun Rein in CNBC. So, what do they do when they can only buy one house? They buy a really huge one.
At the high end, China’s nearly 1 million US dollar millionaires and 100 billionaires like Mr. Chen are buying one property instead of multiple properties. Restrictions have caused home prices in the medium to mid-upper ranges to stabilize or even drop while standalone villas and homes above $15 million, a category that did not even exist five years ago, are skyrocketing. One developer in Beijing is even touting $50,000 a square meter rates at a new development.
A similar trend is happening in the auto sector. The China Automotive Technology & Research Center says overall auto sales might drop 10 percent this year after an 8.1 percent gain the first quarter because stimulus measures implemented in 2008 to encourage sales are being scrapped and authorities are limiting the number of license plates issued to ease traffic and pollution. Only 21 percent of license plate applications in Beijing in January were successful.
Those who secure license plates are going up-market, as they are in housing. Ferrari’s Chinese sales jumped 50 percent to 300 cars last year and will have similar growth rates in 2011. Porsche anticipates 35 percent growth there this year. Helmut Broeker, Porsche’s head of China, predicts China will overtake America as its largest market by 2014. Mercedes [DAI 48.06 -0.02 (-0.04%) ]saw a 47 percent year-on-year increase in April to 16,536 units sold in the month.
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