Chinese Real Estate bubble has popped. Domain bubble popping next?

[Premium gTLD]

The real Chinese investment money is, or was, in foreign real estate. The sky-high domain valuations based on Chinese investors looking for a place to park some cash followed real estate investing.

If you have an investment model based on purchasing random LLLL.net, LLLLL.com, NNNN.com, NNNNN.com or NNNNNN.com, it might be time to dump as many of those domains as possible right now because it appears the Chinese investment bubble is about to pop.

WSJ - Chinese Pull Back

Chinese Demand for Real Estate Waning

 

[Ms Domainer]

-- if somebody knows about future then Heinlein

Boy, don't you know it.

I acquired a rare 1st edition of his most famous book Stranger in a Strange Land for 25 cents.



But I also have a house full of books with little value...

Hmmm... I see some correlation with the domain industry, LOL.

 

[Matrix1976]

 

[mitok]

https://www.namepros.com/threads/chinese-perspective.889841/

Chinamobi posted some sales in china

Moreover, When they pull the money from real estate, they need a better place to invest. Of course domain names are better investment . Since internet usage is growing day by day.

and Checkout the Chinese Singles day sales: around 9Billion in hours, compared with last year 2Bn
Which clearly shows Online activity gets improved in China.

moreover , i dont support crappy domains.

I dont know whether Chinese like those domains or not . But it is a speculation of domainers that "chinese may like those domains ".

Actually they spent $14.3 billion this year
http://www.businessinsider.com/how-alibaba-made-143-billion-on-singles-day-2015-11

Check the graph on above link.
It must be a bubble! It is unsustainable. Spent amount gone too much up in just one year. This is crazy etc. Yeah, right

 

[Weber]

The sky-high domain valuations based on Chinese investors

New gtld proponents must be getting quite the wedgie with short dot coms getting all of the attention (and sales) for the last couple of months. Best to get used to it.

 

[CJ6]

Let's get back on track.
I do not believe the bubble has burst, but I believe we are flattening out a bit...which is a good thing. After the holidays, things should peak up a bit. That's all my opinion, of course.

 

[Domain Shane]

The real Chinese investment money is, or was, in foreign real estate. The sky-high domain valuations based on Chinese investors looking for a place to park some cash followed real estate investing.

If you have an investment model based on purchasing random LLLL.net, LLLLL.com, NNNN.com, NNNNN.com or NNNNNN.com, it might be time to dump as many of those domains as possible right now because it appears the Chinese investment bubble is about to pop.

WSJ - Chinese Pull Back

Chinese Demand for Real Estate Waning

I heard its because they pulled their money out of real estate and put it into domains. Just saying

 

[Flipsbay]

Lol so this could actually mean more high valuation of domains

 

[wcpthree]

They r buying a ton of properties. Especially in New York. They aren't the only ones. The US realestate market is the home of money laundering for the world. There has been a giant spike as of late. However, domains are still easier to move.


**EDIT: I'm not saying all investments are money laundering, but there are a lot of foreign investors that benefit for tax purposes.

 

[urlurl]

i wouldnt saying they are buying properties to launder money. More likely they are using it to get money out of the country and find assets that devalue as readily as their currency.

 

[Templr]

I heard its because they pulled their money out of real estate and put it into domains. Just saying

It would be naive to think investors have totally switched to domain names, yet the real estate market declined some time ago as the gov were selling the public the idea of buying into stocks.


since the drop of the rmb in August, Chinese investors have been investing heavily into gold, premium contemporary Western art and domains.

 

[frank-germany]

it would be stupid to think that an investor will sell their domains with a loss
especially if they bought them only recently for high prices

how about in 10 years ?
would anybody want short domains by then?

 

[John Abay]

in china everything is running on the bubble which is any time popup and also down.

 

[iAchilles]

The real Chinese investment money is, or was, in foreign real estate. The sky-high domain valuations based on Chinese investors looking for a place to park some cash followed real estate investing.

If you have an investment model based on purchasing random LLLL.net, LLLLL.com, NNNN.com, NNNNN.com or NNNNNN.com, it might be time to dump as many of those domains as possible right now because it appears the Chinese investment bubble is about to pop.

WSJ - Chinese Pull Back

Chinese Demand for Real Estate Waning

This is growing so tiresome. Both sides of the fence refuse to consider each sides views, and both sides are right. Prices to boom, prices to crash, you're wrong, I'm right. Yawn.

It's true that Chinese investment in property abroad has slowed down, but you conveniently failed to mention the fact that prices at home have been rising. Restrictions on the number of properties you can own have eased and the % for mortgage payments have also been reduced. Whether it's a temporary upturn or another short lived bubble is anyone's guess. Some are confident others are skeptic.

Source

You could argue that they've shifted to investing in property back home and you could also argue that this is due to capital controls being more strictly enforced since the market crash. Perhaps this would explain the sudden demand for domain names?

Source

Capital Controls Source

China's economy has also been moving away from manufacturing and the services sector has been outperforming it. Most if not all services these days require some form of online presence.

My personal opinion is that the pace of registrations has outpaced real world demand and that it's 5-10 years too early, which could result in a major correction. However, if China are in this game for the long haul, then prices could feasibly continue to rise with a few bumps along the way. For me it's a question of what their true intentions are in this market. I guess you need to talk to a Chinese domain investor to find out and then you have take what they say at face value.

Government controls on domains could come in to effect which would trigger a major sell off if plans are announced, right now the market is too small for them to get involved. If the current trend continues beyond 2016 then I can see them stepping in if domain mania takes hold of China in a major way. This could only the tip of the iceberg if this happens and we may see prices to soar to new levels. Nobody can predict with absolute certainty where this is going.

To come on to NamePros and state you know exactly what's going to happen, when it's going to happen is beyond arrogant. It's foolish and misguided because there are just too many variables at play. Nobody truly knows what will happen next and the sooner both sides accept this and start listening to arguments backed up by data, the quality of these threads will greatly improve.

Snippets of data are simply not enough to make an informed opinion and good investment decisions, you have to consider the whole picture.

I'm keeping an open mind.

TLDR

Please stop claiming you have a magic crystal ball that predicts the future.

 

[heartland]

My two cents:

Chinese real estate bubble? Yes. To pop, no. Reason: fast urbanization; increasing salary; lower interest on the loan; looser restriction to own properties.

Stock market bubble or crash? Bubble in many stock markets not just China; crashed this year, no, still up a lot this year. Will crash next year? Unlikely. Economy still growing very very strong, even though slowing down, but compared to the pathetic growth rate with those OECD, or developed countries, you already know the answer.

RMB (yuan) devaluation? This is a completed issue. It has been devaluating within China for some time meaning high inflation, but more and more valuable overseas, which is the driving force for money moving out of China, seeking haven for their riches. Will it continue this path? Could go either way: Yuan joining IMF SDR busket providing support for Yuan; slowing down economy pulling it downward; US interest hike likely giving it some downward pressure. Most likely scenario: Yuan will only devaluate against the US dollars next year; no luck for most other currencies, especially those commodity currencies, like Canadian or Austrian dollars, which rely heavily on Chinese demand for raw material or commodities.

 

[tha-she]

Nothing will pop here, except some nerves from a few of you...

You wouldnt really expect the same market to ONLY go upwards and not stop.... this is simply to scare a few of yall away, and if it works you probably shouldn't be playing anyways

 

[krx]

There are a number of competing/contrasting views here on what's happening with Chinese investment in domains and whether the current downturn in new regs is a bubble bursting or a normal correction. Most of these views cite larger changes in real estate investing, the stock market, yuan devaluation, etc. These larger forces could account for longer term trends in domain buying. But the slowdown in domain acquisitions happened overnight. I am struggling to understand what specifically might have triggered the abrupt slowdown. Just prior to the downturn there was a thread discussing comments by Mr. Xu, the founder of 4.cn, that may have cast a pall on the Chinese market. But I have a hard time believing that Chinese domain investors are so fickle and ill-informed that these comments could have such a profound effect. Some have mentioned that things always slow down during the holiday season. But is this the holiday season in China?

What else might account for how suddenly Chinese investment dried up?

 

[mitok]

There are a number of competing/contrasting views here on what's happening with Chinese investment in domains and whether the current downturn in new regs is a bubble bursting or a normal correction. Most of these views cite larger changes in real estate investing, the stock market, yuan devaluation, etc. These larger forces could account for longer term trends in domain buying. But the slowdown in domain acquisitions happened overnight. I am struggling to understand what specifically might have triggered the abrupt slowdown. Just prior to the downturn there was a thread discussing comments by Mr. Xu, the founder of 4.cn, that may have cast a pall on the Chinese market. But I have a hard time believing that Chinese domain investors are so fickle and ill-informed that these comments could have such a profound effect. Some have mentioned that things always slow down during the holiday season. But is this the holiday season in China?

What else might account for how suddenly Chinese investment dried up?

Great comment!
The slowdown was really happened overnight and I didn't noticed anyone mentioned that till now. Somewhere around 20 November acquisitions and registrations dramatically slowed down. Before that date while I was checking domains I noticed hundreds of domains that was registered ONLY FEW HOURS before I checked them. After 20 November I usually see registration date up to 18 or 20 November. Of course there are still new regs from China, but not even close like before 20 November. Moreover, lately I see more Western registrants then before.

It looked like buyout of 5L.com and 7N.com chips will happen in the middle of December, but at current pace it will not happen in less than 5-6 months from now.

I am still confident this "Chinese trend" will continue and chips of all kinds (in .com) will go up in value, but slower than we expected 2-3 weeks ago.

The reason of slowdown lies in seized Chinese underground banks (there are some articles about that, but cant recall where I read that). Few days after that the slowdown started. However, in November 2014 Chinese government also seized dozens of underground bank, but many new ones (or undiscovered) continued to operate so that will be the case this time too.

 

[krx]

The reason of slowdown lies in seized Chinese underground banks (there are some articles about that, but cant recall where I read that). Few days after that the slowdown started. However, in November 2014 Chinese government also seized dozens of underground bank, but many new ones (or undiscovered) continued to operate so that will be the case this time too.

I read about that too. But I haven't read anything that connected the underground bank seizures with the slowdown. It's a plausible theory but do we know this is what caused it?

 

[mitok]

I read about that too. But I haven't read anything that connected the underground bank seizures with the slowdown. It's a plausible theory but do we know this is what caused it?

No. It is just my opinion. I could be wrong, but so far this is the best and most logical reason I found.

 

[heartland]

I doubted. They can definitely buy the domain inside China. Underground banks help channel the money out. If it is the real estate overseas you are referring, it might be related. But domains, it is really far-fetched. Domain investing is just too small a market for the billions they have.

 

[sellercunha]

One thing is certain, Chinese demonstrate a lot of money to invest domain.
Pinyin 7 letters (Daikuan) $ 1,563,000, see link:
https://www.namepros.com/blog/breaking-daikuan-com-sold-for-an-eight-figure-fee.899189/

 

[mibworld]

There are a number of competing/contrasting views here on what's happening with Chinese investment in domains and whether the current downturn in new regs is a bubble bursting or a normal correction. Most of these views cite larger changes in real estate investing, the stock market, yuan devaluation, etc. These larger forces could account for longer term trends in domain buying. But the slowdown in domain acquisitions happened overnight. I am struggling to understand what specifically might have triggered the abrupt slowdown. Just prior to the downturn there was a thread discussing comments by Mr. Xu, the founder of 4.cn, that may have cast a pall on the Chinese market. But I have a hard time believing that Chinese domain investors are so fickle and ill-informed that these comments could have such a profound effect. Some have mentioned that things always slow down during the holiday season. But is this the holiday season in China?

What else might account for how suddenly Chinese investment dried up?

I have a simpler explanation for the slow down (not necessarily the right one though). It has to do with the quality of the remaining domains. Around the date of Mr. Xu declaration most of the buyouts had progressed to a point where most premium patterns had already been taken. That was the case at least for some I had been following like 7N.com, 4L.biz and 5L.com. The remaining names in these segments are mostly random chips, with no discernible pattern.

I mostly stopped buying at this point. I just saw not enough economic justification for buying random domains in these segments, at least for the moment. Are you still buying or did you stop too? And if you stopped, why do you expect others to continue buying? Everybody want the other people to buy the random domains. We want the Chinese to do it. Maybe they want us to buy them?

The market is the sum of all individual decisions, so if a random 7N doesn't look attractive for you, it won't look attractive for most people and that will reflect in the valuation of the domain. And consequently in the buy out or not of the whole segment.

You could argue that this behavior was not present for other buyouts like 4L.net or 4L.org, but I think the circumstances were different for those. First, .net and .org are perceived as more valuable than .biz or than random 5L or 7N, so there was a justification for buying random net and org. Then, the current impulse of the trend at that point was very strong.

I think this is a simpler explanation without any conspiracy theory, but, again, I might be wrong... What do you think?

 

[offersity]

imo this is quite irresponsible post by op, hopefully not intentional

 

[ZDomains]

It comes down to quality over quantity in many cases. I don't see much of a slowdown and there is an overreaction to buyouts possibly slowing down that for some reason people think every buyout would happen in days followed by massive increase in values. It takes a long time for anything to mature in value and stabilize, there will be natural ups and downs and all arounds.

You all need a long term perspective and a realistic approach and stop getting so emotional.

Look at 2008 as an example... the sky was falling the dow was sitting at 6kish after all time highs and the smart folks where paying attention and buying and are now laughing with the market going higher and higher in time.

I don't see a crash, I don't see a bubble I see natural market forces that will be played out over a very long period of time unless of course we no longer need domains to connect to websites in a global economy.

Relax and make good decisions.

 

[domvault]

according to news, there are some cities in China that are being termed as "ghost cities" because of huge inventory of houses and hardly any dwellers.