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Home and Interiors September 2012

The huge number of paper $ millionaires in China has been created in the main by the property market. They bought homes as a safe investment, and carried on doing so for the past ten years. There has been talk of a bubble bursting for a while, but after gold, and putting cash in the bank, property is still the preferred investment vehicle.

Market Drivers

China is experiencing greater urbanization, the middle classes are becoming more affluent and their tastes are becoming more western, yet they still want to feel Chinese. The construction of new homes is still on the increase and predicted to continue until 2020 before starting a slow decline, the principal driver for this continued expansion is the baby boomer period into which the country has just entered during which the number of Chinese getting married will reach an estimated 14 million per year for approximately 10 years. When they or their parents buy them the marital home, all the furnishing is new, no hand me downs for them!

In a drive to slow the economy and restrict inflation, the central government has imposed restrictions related to new home build in major

cities and multiple home ownership among much of the urban population. This slowing of the build process may in fact drive the growth of the furniture and home decoration market as people choose to stay where they are rather than buy another home and either leave the old one empty or rent it out.

The Growing Furniture Market

The furniture market in China is expanding rapidly, and following the trends of mainstream luxury. Brands are opening five to ten stores a year to satisfy the growing demand in tier one and two cities. Buying a new home requires buying all new furniture, and spending approximately 10% of the property purchase price on interior decoration and fit out.

International brands that are performing well in China are Natuzzi, Hulsta, Bo Concept, Roche Bobois and a slew of more niche manufacturers, but they have strong competition from Chinese brands such as Markor and Camerich that now have the design and brand status.


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