Potential market bubble stagnates investment in China

Commercial real estate investors may have reason to worry regarding China's potential residential property market bubble during a time in which developments are increasing, Reuters reports.

Following the Chinese government's actions that lowered home prices, commercial prices are growing rapidly as commercial real estate properties continue to grow, the source reports. Commercial real estate investment in China is expected to exceed $1 trillion yuan ($157 billion USD), higher than the 740 billion yuan ($116 billion USD) seen in 2010.

Developers, such as Shimao Property, County Garden, China Resources Land and Poly, have trended away from the housing market, Reuters says, which has resulted in the country's more than 35 percent increase in CRE investments year-to-date.

Insurance companies have restrained from investing as the prices of office space and shopping malls increases, and rental yields decline, sparking rumors of a market bubble in the country.

"The low investment yield does give us some concern that prices probably have gone up a lot and we need to see the income growth before we can see values going higher," Michael Klibaner, head of China research for property consultancy at Jones Lang LaSalle, told the source.