Vanke report illustration

In an internal e-mai, Yu Liang, the president of Vanke, China’s biggest listed property developer, said property will probably see a slowdown in growth in the near future, but its long-term outlook is still rosy.

China’s property market is showing signs of losing momentum after surging for the past few years. House prices in Shenzhen, Vanke’s hometown, have been the hardest hit among 17 major Chinese cities, according to official figures.

Yu Liang told Vanke staff in an e-mail, ‘The strong wait-and-see sentiment, the plunge in trading volume and bearish projections for the industry are all in sharp contrast to the conditions in 2006 and 2007.

‘From a short-term perspective, a number of uncertainties exist during the adjustment period . . . Based on our judgment, the lack of capital in the industry will continue in the years ahead.’ (The illustration is at the top of the Vanke site. Its symbolism is unclear but it is pretty.)
Source: Reuters

China property

The development of real estate in China has good prospects in the long run despite the durrent sluggish demand according to an expert from the National Development and Reform Commission (NDRC).

Wang Yiming, vice president of the Macro Economy Research Institute of the NDRC, said, ‘The development of real estate has good prospects in a relatively long term. After rational adjustment, it will show a more sound development trend.’

Wang Yiming told a press conference at the 2008 Beijing International Media Center that amid an estimated continuous urbanization drive in China, more people may move to cities in the next decade and more, creating increasing demand for houses.

He said that relative policies and measures will be worked out sooner or later to promote the stable and sound development of the sector.

Real estate investment increased by more than 30% between January and July this year, despite the shrinking housing demand since the second half of last year.
Source: China View

Zhang Xin CEO of Soho

Soho China CEO Zhang Xin is confident that the listed Chinese developers will ride out the current difficulties. She describes the difficulties as temporary and to a large extent caused by government policies as the Beijing government tries to control inflation.

Meanwhile, the lack of readily available credit is actually causing opportunities for a cash-rich commercial real estate developer like Soho China.

The company focuses on prime locations—particularly the city’s central business district.

Zhang Xin said the company will be changing its strategy to sell virtually all of its property projects and gradually increase the portion of investment properties on its books.

She said, ‘In five years, we plan to hold about 1 million square metres of commercial space in central Beijing, which will represent 70% of our net asset value.’
Much more on this HERE.
Source: BusinessWeek

China building continues

According to the National Development and Reform Commission (NDRC) and the National Bureau of Statistics prices of real estate in 70 major Chinese cities rose 7.0% in July compared to the same month last year.

This is 1.2 percentage points lower than the June level which means the growth rate —  not the overall price —  had slowed down for six consecutive months.

Haikou, Urumqi, Ningbo and Beijing took the lead in price rises.

Prices of second-hand houses gained 6.0% year on year, 1.5 percentage points lower than June.

New housing for non-residential use was priced 4.9% higher than last July, with prices of office buildings up 6.7% and those of commercial real estate up 4.1%.

In other words the cost of real estate is still going up at what would be considered elsewhere as a catastrophic rate, but not as fast as it has in the past.
Source: China View

US private equity fund Blackstone Group has opened an office in Beijing to further tap into the fast-growing Chinese market.

Fu Shan, former vice president of Beijing Mainstreets Investment Group, a Shenzhen-listed real estate investment firm, has been appointed as the office’s chief representative.

Fu was also a former official with China’s National Development and Reform Commission, the country’s top economic planning agency.

Blackstone’s relationship with China made headlines in 2007 when it announced China Investment, a firm charged with handling part of the nation’s forex reserve, was making its first ever investment by putting $3 billion into the private equity group.

Blackstone has made its first foray into China’s property market as well, investing RMB1.1 billion ($160 million) in a Shanghai commercial building, according to previous Chinese media reports.

It has also won government approval to buy a 20% stake in chemical firm China National BlueStar for around $600 million.
Source: AFP