An expert Monday warned that official figures are seriously underestimating the amount of property currently lying empty in China.

According to a first quarter report released by the National Bureau of Statistics on Saturday, 123 million square metres of space in new buildings was unused at the end of March, a rise of about 24 per cent year-on-year.

A man walks past a billboard for a new property development being erected in Beijing April 24, 2006. At the end of March, 123 million square metres of space in new buildings was unused in China, a rise of about 24 per cent year-on-year. [Reuters]

In the residential sector, 69.8 million square metres of housing is lying empty, an increase of approximately 20 per cent.

A standard two-bedroom apartment is about 100 square metres in size, so this means there are almost 700,000 apartments unoccupied.

"Our statistics only include the amount of property that has not yet been sold or rented," a bureau spokesman said yesterday.

However, according to Yin Zhongli, a real estate expert with the Chinese Academy of Social Sciences, if the space purchased by speculators but not yet sold on was factored in, the figure might be far higher.

Speculation in the real estate sector is quite common in China, Yin said. "Last year's figures in Shanghai showed that up to half of the new housing sold was not used."

But he could not give exact figures in terms of real vacancy rates, saying it was a hard to get an accurate number.

Yin warned a high housing vacancy rate might disturb the market order and trigger a financial crisis.

Different statistics have shown that the amount of vacant space in residential buildings has been on the rise in recent years, even as ordinary consumers complain they can hardly afford to buy a decent apartment.

In Beijing, for instance, there was 13.7 million square metres of vacant space in residential buildings in 2005, up by 32 per cent from a year earlier.

However, a report released by Beijing Normal University's Finance Research Centre earlier this month said that at least 70 per cent of urbanities could not afford to purchase new apartments.

The report said that buildings with vacant space were mainly in the country's coastal areas, leading property insiders to warn that supply and demand were unbalanced.

The National Statistics Bureau's report stated that, in the first three months this year, investment in apartments aimed at low and medium-income families rose by less than 3 per cent in contrast to the overall 23 per cent growth rate.

The total investment in the property sector reached 279.3 billion yuan (US$35 billion) in the first quarter, up 20 per cent over the same period last year.

Statistics also showed a 4 per cent drop in foreign investment in China's property sector in the first three months of the year, down to 5.2 billion yuan (US$650 million), while the total investment in the same period increased by about 25 per cent, reaching 564 billion yuan (US$70.5 billion).