Canton Properties

London-listed Canton Property Investment, which develops malls in China, has said its executive chairman had disappeared and its shares had been suspended while the firm sought extra funding.

The Hong Kong-based company, incorporated in early 2007, said in a statement that the executive chairperson, Keng Wong had ‘recently been absent from the company and uncontactable.’

Wong’s secretary told Reuters she had not seen him since August, while executives at the company were unavailable for comment.

Canton Property is investing in projects in the southern Chinese city of Guangzhou, where property prices have dropped by as much as 30% in the last year after booming for years.

In March, the company said it had bought from Keng Wong and a business partner, Ye Zhuansong, a 100% stake in a mixed-use property project in Guangzhou for about $350 million.

The project, called Canton Finance Center and including shopping space, offices, serviced apartments and a hotel, would be worth about $1.2 billion when completed, the firm said at the time. But in its statement yesterday, Canton Property said it was seeking funding for the project.

Canton’s non-executive director David Brewer, who held the largely ceremonial post of the Lord Mayor of London in 2005 and 2006, resigned after a board meeting on Wednesday failed to agree on the appointment of an interim chairman.
Source: Reuters

Smog envelops a construction site in Beijing

Ruchir Sharma is head of global emerging markets at Morgan Stanley Investment Management and he has written a major article on the growth of China.

His opinion seems to be that China has simply grown too big to keep expanding at the 10% rate it has sustained for 30 years, and is likely to slow to 8% at best next year and for the foreseeable future.

He writes: For the first time since the Chinese housing market was fully privatized in the late 1990s, a coordinated real-estate downturn has set in across all major provinces. The feeding frenzy of rising prices and increasing demand has given way to a vicious cycle of falling prices and slowing demand.

Housing is increasingly unaffordable, as property prices doubled between 2000 and 2007, and authorities began raising interest rates last year in an attempt to prevent overheating.

Still, for much of this year, developers have continued building with abandon. . . .

Now there is widespread anecdotal evidence that a price war is breaking out from Beijing to Shenzhen.

The full account, which is much, much more, and somewhat gloomy reading is HERE.
Source: Newsweek

Zhang Soulian

Minmetals Land, a listed arm of metals trading company China Minmetals of which the president is Zhang Shoulian, has  formed a joint venture with German investment fund ASPF II Theta to develop a 70,833 square meter residential project in Nanjing, Jiangsu province.

The joint venture, in which Minmetals Land and ASPF II hold 51.47% and 48.53% stake respectively, will spend RMB 884.8 million for a 98.88% stake in the project. China Minmetals will take the remaining 1.12%.

Minmetals Land is mainly engaged in real estate development and specialized construction.

During the first half of this year, net profit of Minmetals Land fell 84% year-on-year.
Source: China Knowledge

Sluggish sales in real estate

After months of steely resistance, Chinese property developers have finally accepted the inevitable and are cutting prices to boost falling sales.

Whether the move succeeds in putting a floor under the market will help determine the fate of the economy over the coming year.

Real estate accounts for 24% of China’s fixed-asset investment and is crucial not only for domestic steel makers but also for global producers of myriad construction inputs such as aluminum and copper.

Jonathan Anderson, a UBS economist in Hong Kong said he expects property and construction activity to stabilize and rebound in the first half of next year.

But many developers, harried by declining sales and financing constraints, are less optimistic.

Prices in major cities such as Shenzhen have plunged by up to 40%.

Average property price inflation in 70 large Chinese cities slowed to 5.3% in the year to August from 11.3% in the year to January.

For some developers, selling unsold homes at a discount is their last hope to survive.
More on this HERE.
Source: Reuters

Changes in property rules suggested

Economic growth should not be overly dependent on the property sector, warns a report from the Chinese Academy of Social Science (CASS).

The report followed the CASS’s investigation into the US subprime mortgage crisis in June. It suggested  the government should rethink the development of the real estate sector, and clarify their role in the market.

Local governments used to bank on the real estate sector for economic growth and land transfer fees were regarded as the main source of local fiscal income.

Statistics from the National Bureau of Statistics show that investment in the real estate sector last year reached RMB2.53 trillion yuan ($370.13 billion), contributing 10.25% to the country’s GDP.

The report suggested that the government reform the housing fund management system and establish housing mortgage banks and companies dealing in securities to back housing mortgages.
Source: China Daily