According to a first quarter report released by the National Bureau of Statistics on Saturday around 123 million square meters of space in new buildings was unoccupied at the end of March which is a rise of 24 percent year-on-year.

In the residential sector 69.8 million square meters of housing is lying empty which is an increase of approximately 20 percent.

A standard two-bedroom apartment is about 100 square meters in size and that could be translated to almost 700,000 apartments being unoccupied.

An expert yesterday warned that official figures are seriously underestimating the amount of unoccupied property in China.

"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 could be far higher.

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

Yin warned that high number of empty homes could disturb the market and trigger a financial crisis.

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 percent in contrast to the overall 23 percent growth rate.

The total investment in the property sector reached 279.3 billion yuan (US$35 billion) in the first quarter which was up 20 percent on the same period last year.

Statistics also showed a 4 percent 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 percent, reaching 564 billion yuan (US$70.5 billion).

(China Daily April 25, 2006)