Developers and investors are expected to slow their property investments in Chongqing because of the city's recent political storm, property consultancy Knight Frank said.
'In the short term, both investors and developers are likely to slow down their investments in the city due to political uncertainties,' said Thomas Lam Ho-man, head of Greater China research at Knight Frank. 'Investors will adopt a wait-and-see approach in the coming six to 12 months because of a change in state leaders.'
Chongqing has been mired in political upheaval since February when former police chief Wang Lijin reportedly fled to a US consulate on the mainland to make allegations about former Chongqing party chief Bo Xilai and seek asylum.
That was followed by Bo's downfall and the arrest of his wife Gu Kailai over the alleged murder of British businessman Neil Heywood.
'We don't see a property crash in Chongqing in the long run because it's still a very hot investment spot in China,' Lam said, adding that the province's property market is still positive and healthy.
But Lam said political risks would affect the property market. Since Chongqing had previously launched incentives for investors, a change in the province's leadership could cast doubt on policy directions.
Lam said the average price of a home in Chongqing dropped about 5 per cent in the first quarter this year. Similar to other tier-two Chinese cities, Knight Frank expects a further 10 per cent to 15 per cent price correction for the mass residential market by the end of this year, with luxury residential flats in Chongqing likely to have a 10 per cent price adjustment for the same period.
