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Considering Vanke: Reviewing the China Real Estate Market Development

“After working in the real estate industry for more than ten years,” writes Cai Hongyan, or Lao Cai, in the preface of his new book, Considering Vanke: Reviewing the China Real Estate Market Development, “I have much to say to outsiders [about the market], albeit with mixed feelings of love and hate.”

This is the second book from Cai, an experienced observer and analyst of the real estate industry and founder of Real Estate magazine. The book is considered the first to offer an industry insider’s view of the rise and fall of China’s real estate market in the past ten years.

Cai reviews all the big events in the history of Vanke, or China Vanke Company Limited (SZSE: 000002, SZSE for Shenzhen Stock Exchange), which is the largest residential real estate developer in China. His discussion of Vanke is carefully framed against a background of economic growth and urbanization in China. “For the past ten years,” concludes Cai, “the real estate industry has been a great driver of economic growth in China.”

In 2008, after growing rapidly for 10 years, China’s real estate market appeared to hit a wall. Some people believe demand has declined. Cai disputes the contention: “How big is the demand for residential real estate in China?” While nobody can give an accurate answer, Cai believes it is essentially limitless. Why did Vanke, the leading residential estate builder, suddenly change its policy and cut prices last year? With Vanke so prominent in the market, answering these questions could enlighten many observers of the Chinese market.

Although 2009 is “the Year of Ox” on the traditional Chinese calendar, it has yet to have anything to do with a bull market. With the global financial crisis taking its toll, world stock markets have plunged with no real bottom in sight. Large financial institutions have collapsed or have been bought out. Governments around the world are busy with rescue packages, trying to save their economies. What will China do in the global economic crisis? How will the Chinese real estate market survive the cold spell and continue to contribute to moving the economy forward?

This careful critique of Vanke’s handling of the vicissitudes of the modern Chinese market may hold lessons, even some answers, for people in the real estate business and beyond.

Considering Vanke: Reviewing the China Real Estate Market Development

（《批评万科：中国房地产发展反思》）

By Cai Hongyan（蔡鸿岩） 

China Development Publishing House(中国发展出版社)  March 2009, 38 yuan