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China Stocks

E-House IPO: first look

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China. Hot. Housing market in China? Red hot. Put an “e” (hint: eBay) before that? Sizzling. So do we jump into this sizzling (hot) IPO, just by looking at its name and its business, the residential real estate brokage in China? The answer is obviously No.

First a little bit history on Chinese residential housing market. Like many things else, China’s housing market is not market-driven until middle 1990s. Before that most people in cities got assigned apartments by their “Danwei” (employer). Housing was part of the benefit, just like healthcare, provided by the goverment. So what’s the problem here? The housing market was vastly under-developed, and average people have small living spaces. I remember when I worked for a state owned manufacturing company in Shanghai after graduation from college (1993), it would take me 10 years in the waiting line to get “a small apartment” from my “Danwei”, if I’m lucky to get one at all. One of my coworker (and his wife, kid) lived in a 2 bedroom apartment with his bro’s family, his parents, i.e., totally 8 people shared the little 50 square meters (about 550 square foot).

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(Pic above: brokers near Zhongshan Park: Ji Feng Yi Ju and ColdWell Banker, the US chain)