China - Housing 01 (May 08 - May 10)

[winston]

Yes, Winston, I suppose it's due to generous housing loan expansion by the banks

It's actually quite easy to obtain a Housing Loan in China with a stable job.

For new apartments, if < 140 sq m, the downpayment is only 20% and there's even preferential rates.
For new apartments, if > 140 sq m, the downpayment is 30% and no preferential rates.

For resale properties, the downpayment is 30% of the Assessed Value, which is much lower than the Transacted Value, resulting in a very high downpayment of say 40% to 50%.

[winston]

Update: China urban property prices fall less sharply in May

BEIJING - The average annual property price decline in Chinese cities was less sharp in May than in April, pointing to stabilisation in the market.

Property prices in 70 cities fell by 0.6 per cent in May from a year earlier compared with a drop of 1.1 per cent in the 12 months to April, the National Development and Reform Commission, the economic planning agency, said on Wednesday.

On a monthly basis, prices were up 0.6 per cent in May, compared with a rise of 0.4 per cent in April, the commission said on its website.

Annual real estate investment growth quickened to 6.8 per cent in the first five months, up from 4.9 per cent in the January-April period, the National Bureau of Statistics said, suggesting a significant pickup in capital spending in the sector in May.

Property investment is a major driver of China's overall urban fixed-asset spending. Beijing last week lowered the requirement on registered capital for developers to start new projects, a move that helped boost market confidence.

The statistics office also said property sales nationwide increased by 25.5 per cent in the first five months, up from an annual growth of 17.5 in the first four months, sustaining an upward trend that started at the beginning of this year. --

REUTERS

[winston]

DJ MARKET TALK: China Ppty Sector Outlook Turns Brighter -Citi

0924 [Dow Jones] Citigroup tips China property market outlook has turned brighter. Adds, though current share prices have nearly factored in volume recovery, improvement in profitability, price increases should emerge as another catalyst for sector in 2H09.

"After the strong share rally in the past two months, sector valuation has become less compelling, and we believe investors should focus on stocks that present growth opportunities in the next 6-12 months."

Prefers China Overseas Land (0688.HK), China Resources Land (1109.HK), Shimao (0813.HK) and Sino-Ocean Land (3377.HK). Among these, China Overseas Land ended +4.9% at HK$17.22 yesterday, while Sino-Ocean down 0.9% at HK$7.98

[winston]

DJ MARKET TALK: China Ppty Prices To Rise Up To 5% In 2009 -Macq

1012 [Dow Jones] Macquarie raises 2009 China property price projection to 0%-5% increase on-year, vs fall of 5%-10% previously, with more cities clearing inventory overhang.

"The strong sales achieved and the 2008 production cut has created more favorable market demand and supply conditions for China homebuilders."

Adds, with about 55% of contracted sales secured, more developers can afford to raise product prices even at risk of pushing away some buyers.

House continues to prefer developers in tier-two cities over tier-one developers given more attractive valuations of 16X FY09 P/E, or 14% NAV discount, vs 26X FY09 P/E, or 15% NAV premium for tier-one.

[winston]

China’s Property Prices Unlikely to Fall Further (Update1)

June 17 (Bloomberg) -- China’s property prices are unlikely to fall further as increased money supply and credit expansion inflate asset prices, BNP Paribas said, citing China Real Estate Chamber of Commerce President Nie Meisheng.

Residential prices will be the first to rebound, driven by urbanization, followed by commercial property such as shopping centers, BNP Paribas wrote in a note today, citing comments made by Nie at a June 11 workshop organized by the bank.

China’s domestic banks extended a record 5.84 trillion yuan ($855 billion) of loans in the first five months of 2009, almost triple the value a year earlier. Zurich-based UBS AG forecasts new credit may reach 8 trillion yuan in 2009. Housing prices in 70 Chinese cities fell 1.1 percent in April from a year earlier, the smallest drop in three months, according to data from the National Development and Reform Commission.

The central bank has cut interest rates five times since September, scrapped quotas that limited lending and pressed banks to support the government’s 4 trillion yuan stimulus program. China’s property sales rose 45.3 percent in the first five months to 1 trillion yuan from a year earlier, the statistics bureau said June 10. That compares with a 19.5 percent decline for all of 2008.

China’s government is unlikely to adopt a property tax within three years due to “several technical difficulties,” Nie said, according to the BNP Paribas report.

A measure of property developers on the Shanghai Composite Index has more than doubled this year, leading gains among the five industry groups on the gauge.

[winston]

Went to see a property development by Hopson near Chaoyang Garden recently.

They have increased the price from RMB17,000 to RMB22,000 per sq m. And even then, you need put a RMB20,000 deposit and to draw lots, as there are more buyers than #units available.

Are developers playing games or is there real demand out there ? The showroom does not look too busy to me ...

[winston]

SOUTH CHINA MORNING POST

-- Luxury residential property prices in major Chinese cities have rebounded by as much as 20 percent from the bottom early this year, with demand fuelled by concern over inflationary pressures and stock market volatility, according to property agents.

[winston]

DJ MARKET TALK: "Euphoria Valuations" For Some China Ppties -Citi

0900 [Dow Jones] Citigroup believes more mainland developers likely to shift focus from sales volume to pricing, margins, especially for higher-end, city-center properties. Says shift due to strengthened financial position after recent recapitalizations, strong sales in 1H09, 3-6-month time-lag for new supply after 16% on-year drop in construction starts in first 5 months of 2009, recent spike in land prices in urban locations.

Tips decline in sales volume in July-August likely, but seasonal sales declines unlikely to affect growing tendency to hold back new launches in bid to get better pricing. Advises investors to be aware of "euphoria valuations," with share prices of R&F Properties (2777.HK), Country Garden (2007.HK) estimated to have factored in 20%-25% average-selling-price increases from current levels

[eauyong]

Chinese Estates (127) cancels placement

6/26/2009,

Property firm Chinese Estates Holdings has cancelled its planned share placement due to weak demand, sources close to the matter said on Friday.

[winston]

Shanghai’s Office Rentals Plunge

SHANGHAI, Jul. 1 – Rental prices for the city’s high-grade office spaces have plunged because of rising vacancies aggravated by the global financial crisis and abundant supply of office space.

Real-estate services provider, Colliers International, reports that the prices for the city’s Grade A office buildings dropped by 9 percent to RMB7.1 per square meter, or around US$1.04 a day, beginning June.

Moreover, vacancies increased by 1 percentage point to 14.1 percent on average during the same period. “While the city’s residential market has witnessed notable rebounds over the past few months, the local Grade A office market is still far from recovery due to slack demand from tenants coupled with abundant new supplies,” Hingyin Lee, director of research and advisory for Colliers’ East China operations told Shanghai Daily. “We don’t expect any major revival of the office market at least until the end of next year.”

In Pudong, average rental prices for offices dropped by 13.3 percent compare to decrease of 5.9 percent in Puxi. More specifically, Lujiazui rentals are now RMB7 per square meter a day, a price drop of 13.5 percent.

Premium Grade A buildings and other newly completed buildings are even having a harder time at getting tenants compared to Grade A buildings with vacancy rates reaching 18.8 percent on average. This is in comparison to Grade A buildings which reported vacancy rates of 12.5 percent.

Colliers International forecasts that prices may spiral further down as the HSBC Building, 21st Century Tower and Poly Plaza becomes finished in the second half of the year.