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Monday 6 April 2009
Vanke expects sales rebound as market recovers
China Vanke, the country’s biggest listed property developer, hopes to increase its sales volumes this year by about 10 per cent as the housing market pulls out of a deep slump.
China Vanke, the country’s biggest listed property developer, hopes to increase its sales volumes this year by about 10 per cent as the housing market pulls out of a deep slump.
Executive vice-president Shirley Xiao forecasts a 7 to 8 per cent rebound in volumes for the property industry after a 20 per cent plunge last year.
Sales in big cities rose sharply in the first quarter as price cuts and cheaper mortgages revived demand, but Ms. Xiao described the market as still quite fragile and said it would be too simple to declare the all-clear for the broader economy.
“The residential housing market has recovered quite a lot, but not the macro economy,” she said.
“The most uncertain thing is still the macro economy: how the world economy - how trade - will affect the Chinese economy and people’s confidence and incomes,” she said.
Ms. Xiao’s guarded confidence that sales this year will improve “about 10 per cent - something like that” is partly rooted in the judgment that prices are back down to what she calls reasonable levels in the Pearl River Delta, which accounts for 30 to 40 per cent of Vanke’s business.
Average transaction prices in Shenzhen in the first two months of this year fell 27.3 per cent from a year earlier to 11,175 yuan (HK$12,670) per square metre, according to property consultants Savills.
Vanke cut prices by 10 to 15 per cent last year, when it sold 5.57 million square metres for 47.87 billion yuan, down 9.2 per cent and 8.6 per cent respectively from 2007.
Housing statistics point to glimmers of light in a sector that is crucial for the broader Chinese economy, accounting for almost 25 per cent of fixed-asset investment.
Local government figures for last month show residential property sales rose 55 per cent in Beijing, 76 per cent in Shanghai and 56 per cent in Shenzhen, according to Andy Rothman at brokers CLSA. Compared with March last year, the increases were 66 per cent, 27 per cent and 146 per cent respectively.
Still, analysts are wary of reading too much into the bounce.
Na Liu, a commodities analyst at Scotia Capital, said developers were concentrating on clearing inventory; land sales dropped 30 per cent in the first two months, new land development shrank 15.5 per cent and new home starts fell 14.8 per cent.
“This data, together with still weak home pricing, indicate the destocking process is not over for the property sector yet. New investment in the property sector as well as raw material demand from this sector, is unlikely to rebound any time soon,” the analyst said in a report.
Vanke had an inventory of 1.5 million sq metres at the end of last year.
Ms. Xiao said home prices might need to fall further in some big cities such as Shanghai and Hangzhou where the market had started to adjust later than the Pearl River Delta. But she said underlying demand remained strong and urbanisation would keep driving the Chinese property market for another 10 to 20 years.
“Nearly all the buyers now reflect fundamental demand,” she said. By contrast, about 30 per cent of Vanke’s buyers in Shenzhen in 2007 at the peak of the housing boom were financial investors.
Ms. Xiao said supportive government policies had contributed to the market’s revival.
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Vanke expects sales rebound as market recovers
Reuters in Shenzhen
6 April 2009
China Vanke, the country’s biggest listed property developer, hopes to increase its sales volumes this year by about 10 per cent as the housing market pulls out of a deep slump.
Executive vice-president Shirley Xiao forecasts a 7 to 8 per cent rebound in volumes for the property industry after a 20 per cent plunge last year.
Sales in big cities rose sharply in the first quarter as price cuts and cheaper mortgages revived demand, but Ms. Xiao described the market as still quite fragile and said it would be too simple to declare the all-clear for the broader economy.
“The residential housing market has recovered quite a lot, but not the macro economy,” she said.
“The most uncertain thing is still the macro economy: how the world economy - how trade - will affect the Chinese economy and people’s confidence and incomes,” she said.
Ms. Xiao’s guarded confidence that sales this year will improve “about 10 per cent - something like that” is partly rooted in the judgment that prices are back down to what she calls reasonable levels in the Pearl River Delta, which accounts for 30 to 40 per cent of Vanke’s business.
Average transaction prices in Shenzhen in the first two months of this year fell 27.3 per cent from a year earlier to 11,175 yuan (HK$12,670) per square metre, according to property consultants Savills.
Vanke cut prices by 10 to 15 per cent last year, when it sold 5.57 million square metres for 47.87 billion yuan, down 9.2 per cent and 8.6 per cent respectively from 2007.
Housing statistics point to glimmers of light in a sector that is crucial for the broader Chinese economy, accounting for almost 25 per cent of fixed-asset investment.
Local government figures for last month show residential property sales rose 55 per cent in Beijing, 76 per cent in Shanghai and 56 per cent in Shenzhen, according to Andy Rothman at brokers CLSA. Compared with March last year, the increases were 66 per cent, 27 per cent and 146 per cent respectively.
Still, analysts are wary of reading too much into the bounce.
Na Liu, a commodities analyst at Scotia Capital, said developers were concentrating on clearing inventory; land sales dropped 30 per cent in the first two months, new land development shrank 15.5 per cent and new home starts fell 14.8 per cent.
“This data, together with still weak home pricing, indicate the destocking process is not over for the property sector yet. New investment in the property sector as well as raw material demand from this sector, is unlikely to rebound any time soon,” the analyst said in a report.
Vanke had an inventory of 1.5 million sq metres at the end of last year.
Ms. Xiao said home prices might need to fall further in some big cities such as Shanghai and Hangzhou where the market had started to adjust later than the Pearl River Delta. But she said underlying demand remained strong and urbanisation would keep driving the Chinese property market for another 10 to 20 years.
“Nearly all the buyers now reflect fundamental demand,” she said. By contrast, about 30 per cent of Vanke’s buyers in Shenzhen in 2007 at the peak of the housing boom were financial investors.
Ms. Xiao said supportive government policies had contributed to the market’s revival.
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