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

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

Housing in China

China’s real estate market remains an anomaly even though it has charted exemplary growth in the last decade.

Shanghai, Beijing, Guangzhou and Shenzhen are among China’s Tier-I cities most sought after by foreign investors, given their high levels of urbanization, mature property markets and extensive supply of quality buildings.

In 4Q07, China’s real estate investment witnessed a slowdown following the implementation of the land appreciation tax as well as additional restrictions imposed on foreign investment in the sector.

So far, the government’s tightening policies have been successful in that prices have stabilized, while volumes have contracted.

Much, much more (in fact, a full report and survey) on this HERE.
Source: The Edge Daily

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

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