Prices of new apartments jumped 11.8%, down 0.4 percentage points from the same quarter last year, while prices of second-hand flats rose 11.5%, up 1.7 percentage points.

Urumqi, capital of the north-western Xinjiang Uygur Autonomous Region, continued to top the growth list with a 25.3% increase in March. It was followed by Haikou and Ningbo, which saw property prices rose 18.3% and 18.2%, respectively.

Chinese real estate is not all good news. For example prices of new homes in Shenzhen, the southern city bordering Hong Kong, and Nanjing, capital of east China’s Jiangsu Province, fell 4.9% and 0.8%, respectively, from the previous month.

Stricter controls on property speculation have made it much harder to ramp up prices, while the government’s credit squeeze is already hitting developers. In Beijing, strict loan quotas have succeeded in cutting off credit to all but a handful of the biggest and best-connected developers, which can now only secure loans priced at 10% above the nominal interest rate.

China Construction Bank, the country’s biggest mortgage lender, reckons that a 10% drop in the market should cause no major problems, but a 20-30% drop would be very tough for the country’s still fragile banking sector to handle.
Source: HomesGoFast

In January, the State Council said developers would be charged a 20% fee if they hoard land plots and leave them idle for more than a year but less than two years after acquiring them.
The council, China’s Cabinet, said land plots left aside for more than two years will be reclaimed by the government.

The fee, equivalent to 20% of the land transaction price, will be levied strictly from then. Previously, the fee was not regarded as obligatory since the government said it might be charged on ‘principle.’

Xue Jianxiong, head of research at Shanghai Youwin Real Estate Information Service said hopefully the measures, following a series of macro control policies introduced earlier in a bid to cool the country’s real estate market and curb soaring property prices, would help ease the nationwide shortage of land and enable the government to have overall control of the country’s land reserves.

Plots that couldn’t be legally reclaimed should be dealt with as quickly as possible in appropriate ways such as changing their designated purpose, bartering, assigning temporary uses for them or retaining them for government reserves, according to the council’s Website.

The notice also said the Ministry of Land and Resources should join forces with other relevant departments to work out detailed plans regarding land appreciation fees on idle plots.

The government’s determination to implement such tough measures is regarded in the industry as good news for both home buyers and developers plagued by the land shortage. Read much more by clicking HERE.
Source: Shanghai Daily

Elsewhere it is listed as: ‘Acquisition and merger with a listed company by an unlisted company in order to gain a listing on a securities exchange.’ Which sounds less harsh and is probably more accurate.

The news is that mainland real estate developers are thinking about back door listings during this period when the government has a tight monetary policy.

Capital is urgently needed in view of climbing property prices and a broad range of macro control measures over property sector.

To get around the problems of an IPO — which is complicated and expensive to create and may still not work — some real estate developers are giving serious thought to back door listing.

Some of them have announced such plans since the start of 2008.

Zhongnan Real Estate Development is on the verge of realizing a back door listing through Shenzhen-listed Dalian Jinniu. According to the restructuring scheme of Dalian Jinniu, the real estate developer plans to buy 90 million shares in the listed company to become the largest shareholder. The shell company currently focuses on special steel production.
Shandong Wanjie High-Tech announced in January that it would issue not more than 882.35 million shares to five selected investors including state-owned Shandong Commercial Group in exchange for certain proportion of their stakes in five property companies.
Success Information Industry Group has signed an agreement to place 828 million shares to Rongan Group, a Ningbo-based private real estate developer. The latter would inject RMB2.4 billion worth of real estate assets into the Shenzhen-listed company as consideration. Upon the private share placement, Rongan Group will have a controlling 78.01% stake in Success Information Industry, thus achieving a back door listing.

Since the second half of 2006, dozens of real estate developers have completed back door listings.
Source: Trading Markets

BusinessWeek

Even after the private housing revolution of the mid-1990s, when many individuals bought flats at knock-down prices from their work units, property owners had no legal means of protecting their homes.

Last year’s property rights law supposedly changed all that and, according to the Chinese Academy of Social Sciences, a remarkable 80% of urban Chinese households now own their homes.

Property prices have risen rapidly. According to the latest figures, prices in the 70 major cities measured by the government’s property index are growing annually at around 11% although prices at the top end are rising much faster than that.

Two years ago, an apartment in Beijing’s Central Park, one of the capital’s smartest addresses, could be had for around US$2,000 per square meter. Now you would be lucky to get it for US$5,000, while the penthouse apartments cost over US$9,000.

High-end property developers, speculators and the banks that finance the deals have made a fortune, but there are signs that the easy money could be coming to an end.

Stricter controls on property speculation and land-hoarding and the government’s credit squeeze is already hitting developers.

In Beijing, strict loan quotas have succeeded in cutting off credit to all but a handful of the biggest and best-connected developers, which can now only secure loans priced at 10% above the nominal interest rate.

Bigger developers have also been hit by the global credit crunch, cancelling bond issuances as demand from foreign investors has dried up.

Shares in developers like Country Garden and Greentown are nearly 50% off their autumn peaks.

Rising inflation, higher interest rates and tumbling stocks are likely to make banks more cautious about their exposure to the property sector, which accounts for one-third of their loan books.

The banking regulator recently warned banks to step up controls on lending to developers amid fears that unsustainable property prices may trigger a rebound in bad loans. According to the Shanghai regulator, US$280 million in property loans went sour last year, twice the number in 2006.

China Construction Bank, the country’s biggest mortgage lender, reckons that a 10% drop in the market should cause no major problems, but a 20-30% drop would be very tough for the country’s still fragile banking sector to handle. And, there are some suggestions that it may come to that.
Source: BusinessWeek

The projection was confirmed by another report: ‘2007: Report on Chinese capital’s urban and rural areas’ development’ which lists several factors for the predicted fall: real estate tax, yuan appreciation, interest rates adjustments, low-rent housing, economy housing constructed by the government.

As the political hub of a country that promotes the strategy of ‘building a harmonious society’, Beijing is among the top Chinese cities with the highest housing rate.

Beijing’s housing price growth was the fastest among 70 major cities in China in October. Last month, it was second only to Shenzhen according to the latest official statistics.

Prices of commercial houses in Beijing jumped by 16.4% in the third quarter of 2006 year-on- year, compared with 13.7% income growth for local residents in the same period.

Dai Jianzhong, a researcher with the Beijing Academy of Social Sciences said, ‘The exorbitantly high prices have by far exceeded the purchasing power of most residents and prejudiced their interests.’

Compared with 2005, the transaction price of land for residential construction in Beijing in fact dropped by 12% last year, when there was no marked price rise in building materials, meaning real estate developers were ‘profiteering’, Dai said.

Half of online voters participating in a survey on the www.focus.cn, a popular housing information portal, said they believed housing prices would rise this year, compared with nearly 70% of voters who thought so three weeks ago. A much, much fuller report by clicking on HERE.
Source: China Daily

Newly-constructed properties in Guangzhou in March went for RMB9,316 per square meter, a 0.1% increase from February. Meawhile, transaction volumes for new properties have also gone up by more than 60%, although this figure is still 30% lower than that recorded for the same period last year.

Having said that this is the first time in months that Guangzhou’s property market is moving up instead of down.

So Guangzhou has at least started on the right track — from the sellers point of view — while Beijing is positively bullish.

In March, the price of new houses price was up nearly 18% year on year. The average price for new properties inside the fourth ring road has hit a record high of RMB16,935 per square meter.

At the same time, 60% more land has been set aside to build houses.

Nie Meisheng, president of China Real Estate of Commerce, said, ‘I think it’s a signal. The wait and see stance that potential buyers are holding at present will change gradually. I think property markets in first tier cities like Beijing, Shanghai, Guangzhou and Shenzhen, will warm up in the coming months.’
Source: CCTV.com

The 2008 China Property Market report showed that of the 70 cities surveyed, Shanghai last year recorded the lowest rate of property investment growth.

Developers invested RMB130.7 billion($18.7 billion) in the Shanghai property market last year, up 2.5% on 2006. However, the national growth figure was 31.8%.

CASS said if the growth rate remains low, there will be a shortage of houses, which will in turn lead to further price increases.

Over the past 12 months, property developers have been hit by a series of negative factors, including government measures to regulate land sales, reduce credit and provide more affordable homes.

At the same time, the wait-and-see attitude of consumers has made many house builders reluctant to launch new projects.

Shao Minghao, a researcher with Hanyu Property Agency, said he expects Shanghai property prices to continue to grow steadily in the near future.

He said, ‘But the rate of growth will be slower than before. The government doesn’t want property prices to grow at a faster rate than average salaries.’
Source: China Daily

Not helping sentiment are recent warnings about market woes by well known property developers, including Pan Shiyi, chairman of Beijing’s Soho China, and Wang Shi, chairman of China Vanke, of Shenzhen.

Pockets of trouble have emerged, particularly around the southern factory town of Dongguan, where developers have taken the unusual step to slash prices to move newly built units.

At least one large agency firm has shuttered outlets in a bid to stay in business and the real-estate sector has underperformed on the stock market.

According to the 2008 Annual Report on the Development of China’s Real Estate published by the China Academy of Social Sciences nationwide the picture on property prices is more stable than these stories suggest.

The report reads: ‘Though the transaction volume began to decline in the end of 2007, it is still too early to say it indicates a turning point for property prices.’ It describes how long-term trends like urbanization won’t be derailed by cyclical problems.

The authors shy away from specific numeric predictions for 2008 — in order not to influence the market, they say — but say the average price for residential property in China rose 17.5% last year to RMB3,665 (about $524) a square meter. This is the strongest annual gain in four years.
Source: Deal Journal

Quite so. Never have thought of it if it had not been spelled out.

Analysts (remember they were the ones who did NOT forecast the sub-prime slump in the United States) said this might spell further macro-control to prevent the sector overheating.

Despite a minor slow-down in price increases over the first quarter, a National Development and Reform Commission (NDRC) said prices were likely to rebound after a period of adjustment in some cities while overall housing prices nationwide would continue to increase on a modest scale.

There are few who would argue with that.

At the high-profile Boao Forum for Asia earlier this month in Hainan Province, economists and executives recognized 2008 as ‘nothing but a quiet year’ which is probably a polite way of saying we are not certain what will happen.

Hong Yuan Securities real estate analyst Yang Guohua agreed with the official assessment, calling the report ‘fairly objective and credible’.

Despite the snow disruption earlier this year and the declining trade surplus, the Chinese economy still grew 10.6% in the first quarter, a slight decline from 11.7% in the same period last year.
Source: China View

Evergrande (the illustration is from its site) is talking with Deutsche Bank, Merrill Lynch and Singapore’s Temasek Holdings, which together own a combined $400 million of the property developer’s convertible bonds.

The report added: ‘The partners have agreed to take up a larger stake but some details are still pending discussion. Evergrande will have new money for development while the three investors can get a larger piece of the firm and lower their average acquisition cost.’

It does not sound quite as encouraging as it might be.
Source: Forbes