China Headed For A Disaster In The Real Estate Market, Warns Chinese Billionaire

Wang Jianlin (Wikimedia Commons)

After making a fortune in his country's real estate market, Chinese billionaire Wang Jianlin cautioned that it's escalating out of control. In an exclusive interview with CNNMoney, he identified it as the "biggest bubble in history”.

Following  the spectacular crash in the country's stock market last year, which erased the savings of countless small investors, China's leaders should prepare for a similar disaster in the real estate sector.

The Chinese foreign exchange reserves dropped by 14.5 per cent between December 2014 and December 2015. This was the first time since December 1999 that Chinese foreign exchange reserves have fallen over the course of a year.

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During that time, the total amount in dollars leaving China was higher than the dollars coming in. This makes the real estate woes a serious issue for the country.

According to Capital Economics, direct loans to the real estate sector stood at roughly 24 trillion yuan ($3.6 trillion) at the end of June 2016. This should worry China, as the economy is slowing at the same time as high debt levels are rising rapidly.

Wang has been cautioning for a while now on the looming trouble in the Chinese property market. His Dalian Wanda Group, known for developing huge malls and office complexes across China, has been gradually slashing its real estate business.

As per Forbes and Hurun Report data from 2015, his real estate and entertainment empire brought in a revenue of about $44 billion last year, so he is someone who knows the sector.

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