One of the world's fastest-growing real estate markets is being told by its national bank regulator to avoid risks created by a new wave of speculative investment in commercial property.
Reuters, quoting an unnamed source cited in the China Securities Journal, reports that the Chinese government's crackdown on rising house prices has resulted in a new flow of speculative capital into commercial property. As a result, China's banks have been warned to set higher loan approval criteria and collateral management standards on commercial mortgages.
Furthermore, banks have been told to monitor property market risks in China's second- and third-tier cities, which are currently not under government purchase restriction policies. A warning has also been issued to local governments to create a ceiling on commercial property prices.
