Source: www.asiaecon.org |
IS CHINA'S HOUSING MARKET RECOVERING FROM RECESSION?
Asian housing market seems to recovery from its worst recession in decades. Property sales in Asia are growing. As example, China's real estate grew 45.3 percent to $146 billion in the first five months this year.The economists believe that Chinese stimulus plan is working and helping economic growth.
Frank Gong, Chief of Asia Economic Strategist at JPMorgan Chase in Hong Kong said in interview:” As developers run down inventory rapidly they will soon start to buy land and increase spending again”. And he added “Property investment, which accounts for 10% of China’s GDP and is a trigger for growth in related sectors, will become a strong driving force in China’s recovery.”
As part of the stimulus plan, the Chinese government has pledged to build 5.2 million low-rent properties over the next three years and subsidize housing for 7.5 million poor urban families by 2011.
Last month China lowered the amount of funds developers have to put up for property projects to spur construction after cutting transaction costs for property investors last year.
Land sales in Beijing in May exceeded the total amount sold in the first four months of the year, according to the city’s land reserve centre. Property sales by value doubled in Beijing, surged 68.5% in eastern Zhejiang province and climbed 61.9% in Shanghai during the five-month period from a year earlier, the statistics bureau confirmed.
Chinese commercial property developer SOHO said it has built up a war chest of $1.9 billion to replenish its land bank and intends to start new projects in Shanghai and Beijing in coming months.
Indiabulls, India’s third largest listed property developer, aims to launch six to seven residential projects in the financial year ending in March 2010 on the back of an expected recovery in demand.
‘The general mood has been cautious, but there is also optimism. Asian companies in general are in much better shape compared to their peers in other regions,’ said Ayala Land, Chief Financial Officer and Asian Public Real Estate Association President Jaime Ysmael.
In the commercial sector the outlook for Asia’s office market remains negative but most developers said rents have stabilized after falling sharply in the fourth quarter of 2008 and earlier this year.
But some think the recovery will be fragile. ‘There is a risk that this is a bear market rally and the situation could reverse when such liquidity leave the cities or country, or there is new shock to the economies,’ said Kenneth Tsang, Asia Pacific head of research and strategy at LaSalle Investment Management.
Urban property prices in 70 of China’s large and medium-sized cities rose 0.2% in June from a year earlier, the first increase in six months, indicating the country’s real-estate market is recovering from a sharp slowdown.
June’s rise follows May’s 0.6% decline, according to a joint survey by the National Development and Reform Commission and the National Bureau of Statistics published Friday.
Property investment is being closely watched by analysts in China to gauge the strength of any economic recovery.
Rebounding prices could bode well for investment in the sector, but many analysts have raised concerns the market is being supported by easy credit from China’s banks, and could develop into an asset bubble.
Property transactions have been increasing since February, fueled by low interest rates and government measures to support the sector including tax breaks on transactions and lower down payment requirements.
Julien Zhang, managing director of property consultancy Jones Lang LaSalle in Beijing, said thi week that China’s top-tier cities have larger gluts of unused commercial property due to over-investment in the boom years, while the situation in second-tier cities is better.
Prices of newly built residential properties fell 0.6% in June from a year earlier, rebounding from the 1.3% fall in May. Prices in the secondary market rose 2.2% in June from a year earlier, after May’s 0.9% rise.
Source: www.asiaecon.org |