The concentrated nature of the real estate industry in China was a key factor triggering the ongoing property market crisis in the country, a new study by the University of Michigan has found.In 2018, a few years before the beginning of the market's downturn, the top five real estate developers in China accounted for 30 percent of the country's entire housing production—compared to a share of 13 percent in the U.S.
The ongoing crisis has exposed the faults in the housing production model in China, which since the early 2000s has favored a concentration of power within the hands of a few conglomerates while discouraging that of local industry, which remains largely decentralized.Large firms prevailed because they had the advantage of easy access to low-cost capital, an open land market system and the use of pre-sale business practices.