Beijing/Shanghai Bottom Real Estate
Cause
In 1998, China officially ended its decades-old welfare housing distribution system, marking the dawn of full housing commercialization. The government aimed to use the real estate market to stimulate domestic demand and make it a pillar industry of the national economy. Around 2000, as China actively prepared to join the World Trade Organization (WTO), the economy was on the verge of taking off. However, the general public had not yet formed the concept of "real estate investment," with most people still relying on employer-provided housing, while commercial mortgage interest rates remained relatively high.
Process
During this brief historical vacuum, the price of commercial apartments in prime locations—such as within Beijing's 3rd Ring Road or Shanghai's Pudong district—was only about 3,000 to 4,000 RMB per square meter. Homebuying restrictions were loose, and ordinary people could secure prime real estate with a bank mortgage simply by scraping together a down payment of a few thousand dollars (tens of thousands of RMB). After China officially joined the WTO in 2001, the largest urbanization process in human history began. Foreign capital poured in, exports surged, and populations flocked to tier-1 cities, creating explosive demand for prime real estate.