China - Housing 01 (May 08 - May 10)

[winston]

DJ MARKET TALK: Mainland Developers Up; Recovery On Track -Nomura

1041 [Dow Jones] HK-listed mainland developer stocks buck downtrend, likely as investors continue to pin hopes on sector recovery given good sales in physical property market in January, February; immediate upside likely capped at yesterday's intraday peaks, especially for Guangdong-based developers which rallied over past 2 sessions on further supportive measures from government there.

Nomura says last week's transaction volume encouraging, annualized is much higher than 2008 levels; major surprise to market (but not for Nomura) is that prices in some cities show signs of stabilization, while inventories starting to clear. "The sustainable recovery story we painted on Jan. 9 is increasingly visible," Nomura says; advises buying CR Land (1109.HK), Sino-Ocean Land (3377.HK), China Overseas (0688.HK). China Overseas +2.6% at HK$11.14, is best-performing blue chip

[millionairemind]

March 10, 2009
Chinese property prices fall
http://www.straitstimes.com/Breaking%2B ... 48321.html
SHANGHAI - CHINESE urban property prices declined for the third consecutive month in February, despite government efforts to prop up the sector, according to official data released on Tuesday.

Housing prices in 70 major cities fell 1.2 per cent year on year, accelerating from a 0.90-per cent fall in January, the National Development and Reform Commission and the National Bureau of Statistics said in a joint statement.
Chinese property prices fell 0.4 per cent in December from a year earlier, the first decline since the economic planning agency started publishing the figure in mid-2005.

Since October, the government has taken a series of measures, including tax breaks and preferential rates for first-home buyers first homes, to avoid a crash in real estate, which accounts for more than 20 per cent of urban fixed investments.

But the sector is likely to remain sagging for the rest of the year because prices had rocketed 'irrationally' when the market boomed, analysts said.

'There was an unreasonable price surge in the past two or three years,' Yang Guohua, real estate analyst with Beijing-based HongYuan Securities told the official Xinhua news agency.

'For example, housing prices doubled year-on-year in 2007. It was crazy.' The southern boom town of Shenzhen, which borders Hong Kong and symbolises the country's economic reforms, saw the largest fall, with prices down 15.7 per cent.

In Shanghai, the nation's financial hub, prices fell 2.4 per cent in February from a year earlier while in the capital city of Beijing, property prices dropped from January 0.7 per cent. -- AFP

[winston]

DJ MARKET TALK: China Ppties Off Highs;Less Compelling Value-Citi

1533 [Dow Jones] Mixed showing for China property stocks, but almost all off intraday highs, as profit-taking sets in after strong recent rally renders sector valuations less compelling, says Citigroup; estimates overall sector NAV discount has retraced from 47% at end-February vs 21% now, slightly higher than historical average of 26%.

"With these, we believe that current share prices have more or less priced in a continued recovery in transaction volume in 2Q09." Adds, recovery in sales volume doesn't automatically mean improved profitability, as promotions/price cuts one of key forces behind sales volume recovery, these promotions, price cuts "eat into margins."

China Overseas (0688.HK) down 1.5% at HK$12.94; R&F Properties (2777.HK) down 0.3% at HK$11.44 vs intraday peak of HK$12.38, Agile Properties (3383.HK) still up 1.5% at HK$5.25 but off HK$5.96 high

[winston]

http://www.bloomberg.com/apps/news?pid= ... refer=asia

China Home Prices Will Be Stagnant, E-House Says (Update1) By Allen Wan

April 8 (Bloomberg) -- China’s housing prices will be stagnant through 2010 as government efforts to spur purchases through economic stimulus measures and lower interest rates fail to cut into a glut of homes, said E-House (China) Holdings Ltd, a Shanghai-based real estate broker and consultant.

“Prices won’t rise until inventory is cleared,” E-House Chief Financial Officer Li-Lan Cheng said in an interview in New York. “I don’t see such a scenario until sometime in 2010.”

China’s economy, the world’s third largest, faces its biggest threat from the real estate sector, Fan Jianping, head of the State Information Center’s economic forecasting department, said March 18. Home prices fell for a third straight month in February, dropping a record 1.2 percent, the National Development and Reform Commission said March 10.

Housing prices in China’s top 20 cities probably declined 5 percent in March, Cheng said. He said oversupply was the worst in Beijing and Shanghai while the southern cities of Guangzhou and Shenzhen were “bottoming out.”

The decline in prices along with the government’s 4 trillion yuan ($585 billion) stimulus package and a drop in interest rates have spurred home sales this year, Cheng said.

E-House, which offers real estate agency, brokerage and consulting services in 29 Chinese cities, may report a more than 50 percent increase in transaction volumes in March, he said. He forecasts a 20 percent rise for the industry overall in the month.

‘More Proactive’

“Developers have been more proactive with discounts,” said Cheng, who has a Ph.D. in economics from Massachusetts Institute of Technology. “Favorable government policies and lower prices have encouraged people to get back into the market.”

China’s stimulus has already driven investment back to pre- crisis levels, fueled rebounds in electricity and steel output and restored consumer confidence, the World Bank said yesterday.

E-House said March 12 that revenue in the first quarter will be in the range of $31 million to $34 million, up from $29.8 million in the year-earlier period.

“We expect the trend to continue,” said Cheng. “We’re confident in our performance for the first quarter and the rest of the year.”

E-House American depositary receipts rose 1.2 percent to $9.30 in New York trading. The shares have climbed 15 percent this year, compared with a 0.9 percent decline for the Bank of New York Mellon China ADR index.

[winston]

DJ MARKET TALK: Mainland Developers Up; UOB Tips Further Upside

1052 [Dow Jones] HK-listed mainland property stocks up, but paring gains, suggesting intensifying profit-taking pressure as shares approaching recent peaks hit earlier this month, mostly ignoring news 1Q property sales in China +23.1% on-year at CNY505.9 billion, as this well flagged via individual developers releasing monthly sales figures.

UOB KayHian expects overall sales to remain resilient over next two months on back of more new sales launches, continuously improving economic outlook in 2Q09; sector call kept at Market Weight, but says despite strong sector rally of late, believes 40% average discount to NAV still offers upside, continues to like quality private companies, such as R&F Properties (2777.HK), Shimao Property (0813.HK), KWG Property (1813.HK), on back of "improved balance sheets and property sales."

R&F +5.0% at HK$11.72, but off intraday peak of HK$11.90; recent high is HK$12.38 hit April 6

[winston]

China housing prices could halve by 2011: report

Economist sees stagnation in real estate once government stimulus wears off
By Chris Oliver, MarketWatch

HONG KONG (MarketWatch) -- China's property market will likely fall by 40% to 50% in value during the next two years, as transaction activity subsides and as the export sector continues to slump, according a senior Chinese economist quoted in a report Tuesday.

Cao Jianhai, a professor at the Chinese Academy of Social Sciences, told the Financial Times newspaper that the current rebound in the property market was unsustainable and driven by a flood of liquidity and fraudulent activity rather than real demand.

He was cited as saying urban residential property prices would decline by 40% to 50% in the next two years from their levels at the end of 2008. However, he added that housing prices may not fall in the near term, but rather were likely to collapse next year, followed by many years of stagnation.

Recently government investigations had turned up examples of fraud, including developers using fake mortgages to offload apartments onto the books of state-run banks.

Many of these state-run banks are facing political pressure from Beijing to ramp up spending as part of the central government's plan to boost the economy.

Cao's comments were published a day after official data showed China's real estate market posting signs of recovery in March, as price declines eased and transaction activity picked up.

Average house prices in 70 Chinese cities rose 0.2% in March from February, marking the first gain after seven months of declines, according to data released Monday by National Bureau of Statistics. Still, on a year-over-year basis, prices were down 1.2%, after falling 1.2% on year in February.

Cao was quoted in the report as saying average housing prices are now 10 to 12 times the average income. As a result, about 60% of a homebuyer's monthly income must to go to mortgage repayments, Cao said

[winston]

China property stocks to benefit from stimulus package, domestic demand By Desmond Wong, Channel NewsAsia

SINGAPORE: China property counters are expected to benefit from the country's massive stimulus package as well as an improvement in domestic consumption.

Henderson Global Investors said that with slowing global demand, the focus of the US$585 billion stimulus package has been on it's domestic market and property in particular.

The sector contributes some 15 per cent to the country's GDP.

Henderson Global Investors said the government support combined with low valuations as a result of global sell-offs creates investment opportunities in China property stocks.

Andrew Mattock, fund manager, Henderson Global Investors, said: "We can't go out consuming aggressively until we've bought a house or have somewhere to live. So I think the very first priority for the government and people in China is to buy a house. That's why it's going to be an important sector for the country, not just in the near term, but the medium term as well."

Henderson said investors might want to target quality mid-cap property counters rather than market leaders.

Mr Mattock added: "The high quality names are very much over-bought, relative to things you would consider as not as high quality. It's just a perceived quality differential. So the best Chinese property developer, China Overseas Land we see is overpriced relative to the sector."

Among the counters it recommends are New World China Land, Yanlord and other counters that have strong track records but are over-sold.

Henderson said investors may want to gain exposure to China property via the Hong Kong market which features a wide range of counters and strong investor activity. - CNA/vm

[winston]

Went to see some properties in China recently.

Did not drop much in BJ. Around the PICC / Sogo area, at the Fuzhou Garden, Xuan Wu Men, it's around RMB 25,000 per sq m.

Around Financial St, at the Guocoland development, it's around Rmb 30k per sq m ( launched at RMB22,000 ).

In Shanghai at Yanlord Garden, Block 9 ( facing swimming pool directly ), it's around Rmb50k per sq m.

For future reference

[winston]

Developers face funding pressures by Alfred Liu

Mainland residential developers are under fundraising pressure and the sustainability of a recovery in sales remains in question, analysts said, following news of fundraising activity by Shimao Property (0813) and Greentown China (3900).

"Our liquidity test suggests China Resources Land (1109), Greentown and Sino-Ocean Land (3377) may have a relatively large funding gap [and] may have greater need to raise [capital]," CCB International analysts Wang Ren and Edmond Chan said in a report.

The developers may find it difficult to find buyers as the government may not want to see speedy growth in lending.

There could be policies introduced to curb loan growth as Beijing is worried liquidity is flooding into the system, warned Macquarie Research.

"Curbing loan growth is likely to be negative for the recovery in China housing volume seen in [the first quarter] given the easing of mortgage lending has been a key driver of sales," it said.

CCB International said government policy will turn negative if prices jump.

"The central government is unlikely to strengthen its supportive policy along with a massive recovery in transactions," it said.

Other than concern over government policy, analysts doubted whether the recovery in the mainland property market in the first quarter is sustainable.

Weekly transaction volumes in major cities have increased to a level near to, or even exceeding, the 2007 full-year average, according to CCB International.

"Pent-up demand carried over from 2008 was the main driver, but it may not sustain through" the second quarter of 2009, it said.

The broker said transactions in the Beijing market showed signs of a slowdown in the first half of April.

It said there were few launches in the second half of the month as developers would rather wait until the May Golden Week holidays to sell at higher prices in what is traditionally peak season.

[winston]

Property profits plummet by Alfred Liu, The Standard HK

Mainland developers have seen a steep drop in income, with Shimao Property (0813) saying last year's core profit fell 39.3 percent and Greentown China (3900) reporting a 19 percent fall in adjusted net income.

Shimao said underlying profit, excluding net fair value changes, was down to 1.1 billion yuan (HK$1.24 billion) in 2008 from 1.83 billion the previous year due to delays in completing projects.

Net earnings slid 79 percent to 841 million yuan from a year ago. A final dividend of 13 HK cents was proposed.

"We are confident of achieving our sales target this year, and we are raising prices step by step now," said vice president Jason Hui Sai-tan.

Contracted sales this year now stand at 6.6 billion yuan - 44 percent of the 2009 target. Including overseas projects, sales reached 7 billion yuan, Hui said.

A revamp of Shanghai-listed Shanghai Shimao is expected to be completed by June.

After its previous share placement of HK$1.9 billion, the firm's net gearing ratio fell to 42 percent from 53 percent. Shimao has no need to raise further capital, chairman Hui Wing-mau said.

Meanwhile, Greentown said 2008 adjusted net income, excluding revaluation changes, fell 19 percent to 822 million yuan year- on-year. Net profit declined 41 percent to 540 million yuan. No final dividend was proposed.

Greentown's net debt ratio was 140 percent compared to 88 percent in 2007. Its debt balance was 16.1 billion yuan at the end of 2008, with 6.6 billion yuan to be repaid this year.

China Aoyuan Property (3883) recorded a loss of 57.15 million yuan for 2008 against a profit of 602.4 million yuan the previous year. No final dividend was declared.