China - Housing 01 (May 08 - May 10)

[winston]

BROKER CALL - Risks facing China property developers overstated - Citigroup
03 Oct 2008
Xinhua Newsfeed

HONG KONG (XFN-ASIA) - The financial position of most Hong Kong-listed China property developers, while stretched, is still manageable and the risks which they are said to be facing appear to have been overstated, Citigroup said.

The US house noted concerns about deteriorating financial position of mainland developers, the tough environment they are operating in and lack of liquidity.

As a result of their difficult circumstances, many China property related bonds are trading at unusually high yields, it noted.

It said that developers have been cutting back on new projects and significantly slowing their land replenishment plans, resulting in a reduced financial burden from land premium payments and construction capital expenditure.

Citigroup said that while it has conservatively assumed a sales volume drop of 19 pct this year and 12 pct next year, most listed China developers can still survive even if housing prices drop by 30 pct by the end of 2009 from end-June levels.

It said the financial position of two mainland developers, Hopson Development Holdings and Shimao Property Holdings, remained firm as of the end of June this year.

It noted that Hopson has about 7.5 bln hkd in unutilized banking facility and its pre-sales turnover was satisfactory that would enable the company to sufficiently cover its capital expenditure and refinancing requirements in the second half of this year.

As for Shimao, it has available funding of 5.6 bln yuan in cash and unused banking facilities. The company repaid last month a 300 mln usd loan to BNP using internal cash and a majority of its borrowings are non-current, Citigroup noted.

Shimao shares closed flat at 4.80 hkd today while Hopson was down 0.25 hkd or 5.75 pct at 4.10.

[winston]

Blackstone scraps China property deal -paper

HONG KONG, Oct 13 (Reuters) - U.S. private equity firm Blackstone Group has dropped a deal worth about $160 million to buy a commercial building in Shanghai because of worsening market conditions, a newspaper reported on Monday.
Blackstone had been keen to push into the Chinese property market, and sources told Reuters in August that the firm was vying to buy up to four buildings in Shanghai for as much as $1 billion.

But the South China Morning Post reported that plans to acquire a 90 percent stake in Changshou Commercial Plaza from Hong Kong-listed VXL Capital had stumbled over disagreements on the price.

Citing unidentified sources, the report said the deal had been hatched in March for almost double the 586 million yuan ($86 million) VXL Capital paid for the property in March 2006.

VXL shares had fallen 12.3 percent by 0332 GMT.

Blackstone had also failed to agree on a price for the planned acquisition of the new Skymall shopping centre in Shanghai from Chinese developer Super Ocean Group, the newspaper said.

Super Ocean Group, whose chairman is high-profile executive Ye Lipei, had put a package of four buildings on sale as it sought cash to support its growth in other sectors, sources told Reuters in August.

The four buildings also included 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 had wanted to sell the four buildings together, but potential bidders had the option to purchase three of the four, with the combined price between $730 million-$1 billion.

But investors are getting nervous because of the global financial crisis and forecasts that Chinese property prices will slide, partly because of government measures to cool the market.

Beijing has clamped down on bank lending for construction, implemented a land appreciation tax and brought in several rules to deter property speculation.

Although aimed at the residential market, the steps are cooling appetite for land and starving property firms of funding, so they could also put downward pressure on commercial property prices.

But with property prices already dropping in the southern cities of Guangzhou and Shenzhen by up to 30 percent in the last year, many economists expect Beijing to reverse its stance.

Blackstone, in which China's sovereign wealth fund holds a stake, opened a Beijing office in early August and hired a former government official to expand its acquisition business in China.

[winston]

The city governments of Shanghai and Hangzhou are introducing measures to aid their slumping residential real estate markets, official media reported on Wednesday. [ID:nSHA1400] The news may boost badly bruised Chinese property counters.

Roughly a dozen smaller cities across China have in recent weeks taken similar steps to try to strengthen their property markets, where prices have been softening and transactions shrinking as the economy slows.

[winston]

Shanghai raises mortgage loan ceiling by 20pc

Shanghai's public housing agency raised its ceiling on mortgage lending to households by 20 percent to encourage families to buy apartments in the city.

From now, each household can borrow as much as 600,000 yuan (HK$682,692), up from 500,000 yuan, the agency said.

Housing prices in Shanghai, China's biggest financial center, fell 19.5 percent in the third quarter from the previous three months as the volume of sales slumped, real estate broker Savills said.

Average transaction prices, which rose to a record in the second quarter, dropped to 9,092 yuan per square meter, the London-based broker said.

The volume of transactions slid 39 percent from the second quarter and two-thirds from the same period last year to 2.9 million square meters.

BLOOMBERG

[millionairemind]

Published October 21, 2008

China wants to stabilise property market


(BEIJING) China endorsed local measures to stabilise the real estate market and will work out a nationwide policy based on their results, state media reported yesterday.

More than a dozen cities, including Shanghai, Hangzhou and Nanjing, rolled out new measures to encourage house purchases, such as offering cash subsidies for home buyers and lowering taxes and fees for developers.
'Local governments should be allowed certain freedom in formulating real estate policies,' the China Daily quoted Qiu Baoxing, vice-minister of housing and urban-rural planning, said at a forum in Shenzhen.

'We will issue standard opinions at an appropriate time on which of these measures should be kept and which should be ended,' Xinhua news agency quoted him as saying.

A State Council meeting led by Premier Wen Jiabao on Friday concluded that China should build more affordable housing and reduce taxes on residential property transactions, state media reported.

Real estate investment, the second-largest contributor to the country's urban fixed-assets investment, dropped in recent months due to sluggish sales, falling property prices and developers' funding difficulties. -- Reuters

[winston]

Mainland property outlook continues to weaken by Alfred Liu

The mainland's property outlook index fell last month for the 10th consecutive month amid tightening measures and weakness in equities.

The index, which covers price and investment trends in the sector, fell 0.63 points to 101.15, a drop of 3.84 points from September last year, the National Bureau of Statistics said, with readings above 100 indicating positive or improving conditions and the opposite for those below.

"Homebuyers are still taking a wait-and-see attitude now," said Centaline (China) vice general manager and director Lai Kwok-keung.

Despite measures to encourage house purchases - such as cash subsidies for buyers and lower taxes and fees for developers - the outlook is expected to remain gloomy.

"I don't expect the austerity measures to end. The new measures may only be temporary and even regional because the government hopes to lift property prices in some cities after substantial price drops," said Lai, who does not see a rebound in the outlook anytime soon.

Investment growth for the first nine months slowed to a 26.5 percent pace at 2.13 trillion yuan (HK$2.42 trillion) from 29.1 percent in August.

Investment in commercial housing jumped 28.7 percent to 1.55 trillion yuan from a year ago, while investment in social housing increased 19.9 percent to 63.8 billion yuan.

[winston]

Beijing goes for broke to lift homes market by Alfred Liu

Beijing yesterday lowered downpayment requirements for first-time home buyers and cut interest rates on mortgages starting next month.

Effective November 1, the downpayment requirement for those buying their first home, regardless of the size, will be lowered from 30 percent to 20 percent, the Ministry of Finance said.

The floor for interest rates will be pegged at 70 percent of the country's central bank's benchmark lending rates for such mortgages.

"[We aim to] safeguard people's living conditions and improve the lives of people with low incomes," the ministry said.

The property deed tax will be cut to 1 percent from 1.5 percent for first-time home buyers of flats sized 90 square meters or smaller.

Stamp duty and land value-added tax will also be removed temporarily for home purchases. Regional governments may encourage home purchases by some fee-reduction policies.

Meanwhile, housing prices in the mainland's 70 large- and medium-sized cities last month rose 3.5 percent year on year, down from an increase of 5.3 percent in August, the National Development and Reform Commission announced yesterday.

Shenzhen, hit most seriously by the government's tightening measures, recorded a 10 percent decrease in average housing prices. However, property prices in Beijing increased 6.9 percent and Shanghai jumped 2.6 percent

[millionairemind]

W,

This is a sign of desperation cos' they are probably afraid of increasingly social unrest due to crashing stock market, massive job losses as well plummeting house values.

mm

[LenaHuat]

I have friends who are experienced Chinese 'hands' (meaning they lived and worked there for abt a decade) and they are now talking abt taking precautions abt potential security issues - petty crimes and street violence. Growing masses of the unemployed in the Southern cities are generating disquiet.

[LenaHuat]

Did any1 watched U-TV's Chinese version of "MoneyMind" last nite?? The small Singapore developer sold apts at Nanning (Guanxi) for some SGD85,000 a unit (don't know what size). Woa, that's fat. Lucky him.