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

The transaction will not be finalized until the Chinese authorites give approval.

Shanghai Kang Hong Construction is primarily engaged in project management for industrial and commercial real estate development and construction projects. The company also provides a comprehensive range of complementary consulting services, ranging from site search and feasibility analysis services to the management of engineering design.

Worldwide Pöyry’s net sales in 2007 amounted to just over $1 billion and it employs 8,000 experts.
Source: Ad Hoc News

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

Zhongguancun technology district

A sign of the times is that Beijing Centergate Technologies, developer of the city’s Zhongguancun technology district, has canceled its plan for an RMB18 billion ($2.6 billion) share placement to obtain real estate assets.

Centergate said tight monetary policy this year had seriously affected China’s real estate sector.

The company said in a brief statement, ‘It’s unclear how profitable the real estate assets that were to have been injected into Centergate would actually be.’

The original idea, announced in early May, was that Centergate would place as many as 1.23 billion new shares at RMB14.67 each with its controlling shareholder, Beijing Pengtai Investment, and related parties.

In return, it would have taken over Beijing Pengrun Real Estate Development, obtaining a range of real estate assets including some in the western Chinese city of Chongqing. Now the deal is canceled or delayed.
Source: Reuters

China real estate

The China Insurance Regulatory Commission has said that China’s insurance companies are soon to be allowed to invest in the domestic real estate sector.

Wu Dingfu, Chairman of the China Insurance Regulatory Commission, quoted in the state media, said the draft of the revised insurance law allows insurance companies to invest in ‘bonds, stocks, funds and real estate.’

Currently, insurers have to set up a separate investment arm to channel money to some of these markets and this new ruling may bring more investment into the top end of the property market.

Ping An Insurance put RMB4 billion in the property market last year through its investment firm Ping An Trust & Investment.

Several Chinese banks have been approved to invest in the insurance market and set up joint ventures with insurers.

The end result is that as China becomes more lenient in its policies to keep banking and insurance markets separate, the financial industries become more intertwined.
Source: China Business News

Beijing housing

Chen Jian, executive president of Beijing Olympic Economy Research Association, said at a press conference that the housing prices in Beijing after the Olympics will go up following a period of adjustment. What he did not say is how long that period of adjustment might be.

He said general housing prices in Beijing were rational when the city prepared the Olympic Games but that some bubbles arose between 2005 and 2007.

According to Chen Jian, from the end of 2007 to the first half of 2008, the city’s real estate market entered a period of adjustment, and the period may be prolonged after the Games.

However, he sees the room for housing price declines as being very limited and the ensuing huge housing demand will support the city’s housing prices.

But according to experts at a forum sponsored by the Beijing Times, Peking University and Renmin University of China, the shrinking transaction and price declines in China’s key property markets mark an end to the era where property enterprises could earn huge profits. More on this HERE.
Source: China Daily

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

Vincent Lo

One property tycoon, Vincent Lo, has spent $700 million in the past year acquiring at least a dozen big real estate projects left unfinished by cash strapped developers in China.

Vincent Lo, whose latest investment company is China Central Properties, said, ‘Last year, when the market was hot, everyone thought they could make a pot of gold. But this year, they see that isn’t true. This shaking out is going to move the industry in the right direction.’

In part the slowdown is the result of Beijing’s efforts to rein in rapid growth.

China’s estimated 50,000 small developers who borrowed heavily last year to buy land are now suffering financial problems and unable to borrow enough to keep going. A growing number are either folding or seeking aid.
Source: Propertywire

China real estate sales show

The first half of 2008 saw a slowdown in the growth rate of loans to real estate developers and buyers.

The People’s Bank of China (PBOC) reports Chinese bankers held loans totaling RMB5.2 trillion (about $580 billion) to real estate developers and housing buyers by the end of June, up 22.5% year-on-year.

The central bank said the growth rate was two percentage points lower than the same period last year, representing a decline for seven consecutive months since last December.

China’s real estate investment grew fast in the first half, but the housing price decline in some cities has strengthened a wait-and-see attitude among housing buyers, which has held back housing sales.  The country’s real estate developers sold out about 260 million square meters of houses in the first six months, and the sales value totaled RMB1 trillion, representing a decrease of 7.2% and 3.0% over the same period last year, respectively.

The PBOC had been warning banks to control their exposure to real estate.  Obviously the banks are responding.
Source: China Stakes.com

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