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Mr. Zhou explained why he shies from stocks, "Chinese stocks are political plays as much as business ones. State-owned oil giants Petrochina or Sinopec might do poorly because the government forces them to cap prices. Or Baidu , Netease or Sina might get hit by Internet regulation campaigns. You need to analyze political winds as well as business ones. It is simpler to buy homes."
Many wealthy buyers simply buy multiple homes and leave them empty because they do not know where else to park their money. Leaving homes empty does not mean there is a bubble, as hedge fund short seller Jim Chanos argues, if buyers can afford to hold the homes, as they generally can, however, it does indicate resource misallocation. Millions of Chinese live in sub-human homes yet millions of units remain empty.
To remedy the situation the government should force real estate developers to sell completely renovated apartments. The vast majority of homes currently are sold as empty concrete hulls. Homebuyers need to buy pipes, paint, faucets, tiles, flooring and install it themselves.
Renovating your own home is a tiresome process, so many homebuyers buy units and leave them untouched, hoping to sell later.
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