Evergrande is ‘just the beginning’: More firms must exit China’s property sector

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Evergrande is ‘just the beginning’: Professor says more firms must exit China’s property sector

• China’s real estate sector has to be “substantially smaller” to keep the overall economy healthy and stable, said Li Gan, economics professor at Texas A&M University.
  
• “We have too big of a risk in the sector. We built too much housing, so the stabilization first has to come [from] trimming the sector,” said Gan.
  
• Gan estimated that about 20% of China’s housing stock is left vacant, yet developers continue to build millions of new units each year.
  

China’s real estate sector has to be “substantially smaller” to keep the overall economy healthy and stable, said a top expert on the Chinese housing market.

“We have too big of a risk in the sector. We built too much housing, so the stabilization first has to come [from] trimming the sector,” Li Gan, an economics professor at Texas A&M University, told CNBC’s “Street Signs Asia” on Wednesday.

Gan estimated that about 20% of China’s housing stock is vacant as buyers rack up second and third properties as investments. Even then, developers continue to build millions of new units each year, he said.

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