China property

Property sales and real estate investment in China continue to dwindle. Now some experts expect the situation will last longer than expected, with some smaller developers folding altogether.

Liu Wenwei, an economic planner, said sales of commercial homes totaled 277 million square meters nationwide in the first 7 months this year. The number is down nearly 11% from last year. And the growth rate is 37.2 percentage points lower than a year ago.

The amount of completed residential or existing homes is down 18% in terms of area, from a year ago. And the number of pre-sale residential homes is down nearly 8%.

Nie Meisheng, Chairwoman China Real Estate Chamber of Commerce, said, ‘China’s property sector is experiencing typical stagflation at the moment. Trading is declining, which also drags down investment. While real overall housing prices in the country are actually growing.’

Property investment has also slowed in China since the middle of the year. Figures from the National Development and Reform Commission show that during the first 7 months this year, Chinese developers bought 5% more land use right, year on year. But the growth rate declined 6.7 percentage points from a year ago. Land use right purchases in July alone dipped by 28%.

Nie Meisheng said,’Developers are very cautious now when taking land use right. One of the reasons is they have no clues as to what the market will look like in 2009. Another reason is that it will take them more time to balance their cash flows.’

Much more HERE.
Source: CCTV.com

Commercial property

The People’s Bank of China (PBOC) and the China Banking Regulatory Commission (CBRC) are urging rigorous credit management on commercial property projects to curb possible risks that could threaten the banking sector.

The policy will have significant impact on property developers as financing will be more difficult.

No loan will be given to developers to cover land transfer costs.
Loans for land reserve acquisition will be secured by property developers through the use of a mortgage and require a legal land use certificate.
The amount of the loan shall be less than 70% of the estimated value of the project.
The credit period will be confined to two years.
No credit of any kind will be offered to projects where land had been idle for two years or more.
Provision of credit will be more cautious to government-approved construction projects that have not started within a year after a land concession contract was signed.

This would also apply to projects where its developed land area was less than one-third of the total, or where the investment was less than a quarter of the total within a year after starting construction.
Source: China View

Lujiazui Skyline Pudong

Global buyout funds and property investors including Blackstone Group are vying to buy up to four commercial buildings in Shanghai for as much as $1 billion.

Super Ocean Group has put a package of four buildings on sale as it seeks cash to support its growth in other sectors.

The four buildings to be sold by Super Ocean include the Bank of Shanghai Tower in the Lujiazui area of Shanghai’s Pudong financial district, and Southern Securities Mansion, located on Nanjing Road, one of China’s busiest commercial streets.

Super Ocean aims to sell the four buildings together but potential bidders have the option to purchase three of the four. They put the price tag for the deal at RMB5 billion to 7 billion ($728.8 million-$1.02 billion).

It is suggested that talks between Blackstone and Super Ocean could collapse over valuation of the buildings.

One source said, ‘It’s not easy for Blackstone and Super Ocean to reach a deal as Super Ocean is probably asking too much for these properties. There are also concerns about the ownership structure, which is a bit complicated for some of the four buildings.’
Source: Reuters

CB Richard Ellis is first in the ‘Top 25 Brands’ survey by The Lipsey Company for commercial real estate services. The firm has been ranked No. 1 for the past six years, since the survey was started in 2002.

CBRE President and CEO Brett White said, ‘Our 29,000 professionals are the CBRE brand. Their talent, combined with our unsurpasses global platform, has solidified our position as the industry leader, and built our reputation as the premier commercial real estate services company in the world.’

Second in the survey was Cushman & Wakefield and third Colliers International.
Source: CBRE, The Lipsey Company

A recent industry analysis conducted by CB Richard Ellis has concluded that while major property sectors in Shanghai, Beijing and Guangzhou continued to grow steadily during the third quarter, real estate markets in other major cities across the country are also still rising. Some reports:

Shenzhen

The prime office market, as seen in our illustration, remained buoyant during the third quarter of 2007. The average price of quality office space rose 9.8% to RMB17,817 (US$2,375) per square meter from the previous quarter.

Rentals rose 2% quarter on quarter in the Grade A office market and 4.9% in Grade B buildings. About 213,835 square meters of office space was completed during the three months. The overall vacancy rate fell from 15.9% in June to 13.6% in September.

Dalian

Demand was stable in the prime office market during the third quarter with average rents increasing moderately and vacancy levels continuing to drop. Overall rents rose 1% from three months earlier to RMB63.6 per square meter per month while the average vacancy rate dipped to 20.1% in September from 20.6% in June.

Tianjin

The prime office leasing market in Tianjin stable in the July-September period, with the average rent rising 0.2% to RMB98.7 per square meter per month. As no new supply came on the market, the vacancy rate fell 1.4 percentage points to 17.7% at the end of the quarter.
With major properties under renovation, the prime retail property vacancy rate rose to 14.4%.

Hangzhou

Average office rents increased at an accelerated pace in the third quarter — rising 1.6% to RMB107.3 per square meter per month. And the overall vacancy rate dropped 0.9 percentage points to 10.6%.

Strong demand and lack of new supply in the prime retail market kept vacancy levels low at 2.7%. During the period, rentals for ground-floor and first-floor space recorded quarter-on-quarter growth of 4.2% and 3.7%.

Chengdu

Prime office rents in Chengdu rose 0.6% to RMB89.9 per square meter per month. The average rental of Grade A office space increased 2% from a quarter earlier. Vacancy rates for prime offices dropped 3.9 percentage points to 28.4% during the third quarter.

Xiamen

No new openings in the prime office market was recorded in Xiamen in the past quarter. The average price of prime office premises rose slightly, while rents remained almost unchanged during the period. The overall vacancy rate of the city’s prime retail properties increased 2.4 percentage points to 25.5% at the end of the quarter.
Source: China.org.cn