Shanghai’s real estate agents are keeping prices high despite talk of a property slowdown. As a result buyers are not responding to the offers.

The central bank’s first-quarter survey of residents in 50 Chinese cities shows that only 14.6% plan to buy homes in the next quarter, down 1.3% from last quarter and a 1.9% drop year-on-year.

Of the seven big cities surveyed, Shanghai saw the most distinct fall in homebuyers for the next quarter, down to a record 4.3%.

However, there are signs the market could be about to warm up again.

According to the China Real Estate Index System, 5,260 commercial apartments were sold in Shanghai from Mar 17 to 23, up 14.37% on the previous week, and the sixth consecutive weekly rise.

Zhang Qi, an analyst at the China Real Estate Index System, said ‘Property prices in Shanghai have shown signs of recovery this month, as huge demand still exists in the city.’
Source: China Daily

There is almost no commodity more suited to the Internet than private real estate. There is almost no area of the Internet which more threatens newspapers and magazines. The ability to be able to search by area, size, price what ever and then see pictures of the property — with video coming along very quickly — means that property hunting becomes a pleasure instead of a dreary trudge through newspaper columns.

Chinese leading Internet portals like SINA, NetEase.com and Baidu.com have successively started moving into the online real estate field.

SINA announced in February that it would spin off its real estate and home decoration channels to set up a joint venture with real estate service provider E-House.

The joint venture will operate SINA’s real estate and home decoration channels and will team up with E-House China to explore new revenue modes. Basically this will be done through a proprietary real estate information database and analysis system, China Real Estate Information Circle system, which contains transaction data on land, residences, offices, as well as commercial buildings in 30 major cities in the country.

NetEase is doing something similar. It has established a strategic partnership with Nettop.cn on real estate and home decoration online advertising segments.

Nettop will be responsible for the content construction and advertising operation of NetEase’s real estate and home decoration channels.

Baidu announced in February that it, too, was moving into the area of real estate online advertising.

When it comes to buying propery Internet users, which is biased towards 25- to 35-year old users, are a strong potential house buying group.

Real estate online advertising has been leaping in recent years. From January to October 2007 it increased at a pace of 65.4%. And it does not seem to be slowing down.
Source: Trading Markets

Evergrande Real Estate Group, Donald Trump’s potential partner in a Shanghai office project, and its owners said that it plans to raise $2.1 billion in the world’s largest IPO by a real estate company since June.

Evergrande plans to sell 2.85 billion new shares for $0.45 to $0.7 each. Existing owners will be offered 110.9 million more shares at the same price.

The Guangzhou-based company may become the first Chinese developer to complete a Hong Kong initial public offering this year, amid the slowest start to the city’s IPO market in eight years measured by the number of sales.

Evergrande focuses on smaller projects, which enables it to shorten development periods to three to five years, compared to five years for other homebuilders. It anticipates a sevenfold increase in earnings this year on strong property revenue

A wide price range for the proposed $2.1 billion IPO suggests the issuer wants as much flexibility as possible should the markets turn during the roadshow.

Evergrande, which focuses primarily on second tier cities, is expected to deliver strong earnings growth over the next few years after an aggressive accumulation of land in the past 18 months, but based on the pricing terms it appears the company realises that this may not be enough in the current market environment.

Acknowledging the fact that Chinese property stocks aren’t exactly the most favoured sector at the moment one source said during the pre-marketing, ‘It will have to come cheap.’

Evergrande’s IPO will stay open until March 18 and the final price is expected to be determined by the 20th. The trading debut is scheduled for March 28.
Source: MenaFN and Finance Asia.com

Parts of the real estate business in China are in strife. According to a recent article in the Financial Times shares in some of the country’s largest listed property developers fell more than 50% last year.

Shenzhen-based Zhongtian recently shut most of it branches and the owner went into hiding. Chuanghui, also Shenzhen based, closed more than half of its 1,800 branches. A company representative said, ‘We are doing our best to get cash.’

Knowing that gives new insight to the deal that that Realogy, the U.S.-based real estate conglomerate, is acquiring a minority stake in Century 21 China Real Estate, the independently-owned company that franchises Realogy’s Century 21 brand in China.

This is the largest real estate franchiser in the country and owns 300 Century 21 offices in Beijing and Shanghai. And it claims that its franchisees operate 950 stores in 40 cities. The overall claim on its web site is that Century 21 China Real Estate has 1,300 offices.

The press release quotes Donald Zhang, chairman of Century 21 China Real Estate, as saying, ‘With this added support from Realogy Corporation, we are even more confident that we can continue the growth of our company and the Century 21 network in the People’s Republic of China.’

Another press release claims that more than 11,000 sales associates work under the Century 21 real estate brand in China and that the company is among the three largest residential real estate brokerages in 90% of its markets, and is the largest firm in 30% of those markets.

Realogy’s franchise systems have approximately 15,000 offices and 315,000 sales associates doing business in 87 countries around the world. It has about 13,000 employees worldwide.
Source: Realogy

Chinese property stocks have been one of the worst hit sectors in the current market downturn, which entered its fourth month last week. Some analysts project the trough is near and that the fundamentals remain favorable.

While most market participants still believe there will be stricter regulations and more credit tightening to come, Fitch ratings agency argues that robust economic growth, urbanization and renminbi appreciation will continue to drive demand for Chinese property.

It also says limited land supply, land hoarding, delay in property development and sales are also expected to create a shortage in the housing market.

Analysts at UBS are cautious about the China property market in the near term but longer-term they agree with Fitch and expect demand-driven growth in the physical market to resume in the second half of this year.

Their counterparts at Credit Suisse are even more optimistic and predict that strong momentum in home sales will return in the first and second quarters.

However, the bank contends that 2008 will be a much tougher year than 2007 for the Chinese developers.

In general, analysts favour property developers operating in northern China where prices haven’t risen at the same rapid pace as in the large cities further south.

Some analysts believe Shenzhen will be the worst hit among the four major cities, because of the high percentage of speculators among the property buyers in 2006 and 2007.

Prices at several Shenzhen real estate projects corrected by more than 20% in 2007 and there could be another 20% of decline.

However there seems to be general agreement that although the future looks positive there are likely to many bumps in the road.
Source: Finance Asia