The Floundering Town-Builder of the Future Shows China’s Real-Estate Risks

The latest Chinese real-estate company to run into serious trouble is a lesson in the risks attached to Chinese property: They are neither predictable, nor limited to the sector alone.

This week, China Fortune Land Development said it had overdue debt repayments worth 5.26 billion yuan, equivalent to $814 million. It blamed the macroeconomic and credit environment.

The company specializes in developing industrial parks and entire new districts. As recently as 2018, its flagship development Gu’an New Industry City, south of Beijing, was heralded as “a model for the kinds of ‘new type’ urbanization that the Chinese government hopes to see develop across the country,” according to a report from the University of Pennsylvania’s Wharton School and E-House China, a property data and information services website.

Analysts tend to present every troubled real-estate company in China as an idiosyncratic case, but a rapid slide in China Fortune Land’s credit ratings naturally raises questions about which other property developers are currently enjoying an unrealistically low cost of capital. Since January,

Moody’s Investors Service

and Fitch Ratings have downgraded the company four and seven notches, respectively, putting it deep into junk territory. That’s a demonstration of just how quickly things can change.

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Real Estate Crowdfunding vs. Stocks: Risks and Returns

With plenty of options out there, choosing which investment opportunity is right for you is a potential minefield. You can look into the traditional market investments such as stocks and mutual funds, but there is also the burgeoning real estate crowdfunding market to consider. This method of investing describes a group of investors pooling their money to fund a real estate project.

Real estate crowdfunding allows you to invest in real estate passively, without having to worry about maintaining and managing the property. It has opened up avenues for people who can’t commit the whole price of the project by themselves, but are interested in investing. This makes it particularly attractive for millennials: According to UOWN, 54{ac967ad544075fb2f6bcea1234f8d91da186cac15e616dc329e302b7c7326b8c} of people who invest in property crowdfunding are between the ages of 18 and 30.

As an indication of how popular stocks and shares are, 2.2 million people in the United Kingdom were subscribed to stocks & shares ISA account in 2019. Investing in stocks is a process that requires more scrutiny and research, as the market is more volatile. The industries in which public companies are based can be very volatile, and more prone to price fluctuations due to external

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