Real Estate Development in Chinas Third Tier Cities

Abstract

The development of real estate in China is undergoing a difficult time. Development in the third tier cities is at a high rate, yet there is little or no population growth in these cities. Instead, the people are moving from these cities to others, creating a fall in the price of housing. The challenges have been occasioned by the free market in which the firms are operating, even though 60% of Chinese GDP is from these cities. It means that they are important, and there is a need to ensure that they are well regulated to create sustainability. The study used a document analysis method to collect the data. The researcher examined the different papers and documents which have been published on the subject of real estate development in Chinas third-tier cities. Thereafter, a critical analysis was conducted to make sense of the data and information collected. In the following sections, this paper will discuss the current state of real estate and the potential impact of the overdevelopment in Chinas third tier cities. This paper notes that tier-three cities are overdeveloped, yet the population is lower than what the real estate sector supplies. This means that the sector is in deep debt, an issue that can and should be avoided. In the meanwhile, the relevant recommendations will be given. Some of the recommendations include the following: Formulating appropriate policies to ensure that there is clear regulation for investors in the real estate industry in China; The government should take an active role in the real estate sector in China; The government needs to ensure that there is little mass flow of people from third tier cities by ensuring that there are incentives to make people stay in the cities.