The sign of the slowdown in China is the fact that rents in Honk Kong are falling. Rentals there have been from $10,000 to $23,000 a month. They were off almost 20% in 2011.
The high-end rentals are falling faster.
The market for rents in the range of US$25,000 to US$32,000 has been particularly hard hit because some financial institutions and banks have chosen not to fill vacancies at the director level, says one property agency. Many financial industry expatriates are reportedly considering moving down from the rarefied higher reaches of Hong Kong’s Mid Levels to Discovery Bay, which requires a ferry ride to Hong Kong’s central business district – and used to be called “Delivery Bay” because so many young couples pushing prams chose to live there.
The bubble has not yet burst. But the slowdown is real, and it is accelerating.
The Austrian theory of the business cycle is valid in China, too. But the central bank has pumped up money to keep the boom going. There is now a huge bubble in rental properties.
As always, those in the middle of a bubble deny that it’s a bubble.