China's Construction Boom Slowing Down
A major European financial services company warned that signs point to China's recent construction boom hitting a wall soon. French investment bank Societe Generale released a report warning that demand for construction services and products was softening, signaling a potential downturn after a year of substantial growth, reported constructiondigital.com.
"We believe the current pace of construction activity is unsustainable and a painful adjustment will come sooner or later," an analyst for Societe Generale stated.
Among the signs that Societe Generale pointed to in its reports was sales for excavators, which had fallen by 65 percent in May compared to the same month last year. Bulldozers and loading equipment also took a dip compared to May 2010.
The report also stated that China's cement consumption was unsustainable and outpaced healthy levels. The country accounted for 55 percent of the world's cement consumption during 2010. Societe Generale believes China is setting itself up for a construction bubble that won't last.
Last year China's construction industry received a huge boost in the housing sector as members of the rural population moved into cities. Across China about 1.8 billion square meters of new apartments and condos were built, enough room to house 60 million people.
Construction in 2011 has the country on pace to add housing for an additional 300 million residents by 2015, including 36 million units of affordable housing as part of the government's five-year plan. According to the International Monetary Fund's estimates this amount of housing would match China's projected urban needs in 2030, meaning the country is building more housing over the next four years than it will need in the next two decades.
"We believe the current pace of construction activity is unsustainable and a painful adjustment will come sooner or later," an analyst for Societe Generale stated.
Among the signs that Societe Generale pointed to in its reports was sales for excavators, which had fallen by 65 percent in May compared to the same month last year. Bulldozers and loading equipment also took a dip compared to May 2010.
The report also stated that China's cement consumption was unsustainable and outpaced healthy levels. The country accounted for 55 percent of the world's cement consumption during 2010. Societe Generale believes China is setting itself up for a construction bubble that won't last.
Last year China's construction industry received a huge boost in the housing sector as members of the rural population moved into cities. Across China about 1.8 billion square meters of new apartments and condos were built, enough room to house 60 million people.
Construction in 2011 has the country on pace to add housing for an additional 300 million residents by 2015, including 36 million units of affordable housing as part of the government's five-year plan. According to the International Monetary Fund's estimates this amount of housing would match China's projected urban needs in 2030, meaning the country is building more housing over the next four years than it will need in the next two decades.
