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18-08-2014, 12:34 PM
Smart money long gone from China property
PUBLISHED: 0 HOUR 2 MINUTES AGO | UPDATE: 0 HOUR 1 MINUTES AGO
Smart money long gone from China property
Hong Kong billionaire Li Ka-shing has sold about $3.5 billion worth of property on the mainland and in Hong Kong since August last year, according to the South China Morning Post. Photo: Bloomberg
LISA MURRAY
China economic outlook threatened by property decline
If Asiaâs richest man is any guide, the smart money started leaving Chinaâs property market a year ago.
Hong Kong billionaire Li Ka-shing has sold about $3.5 billion worth of property on the mainland and in Hong Kong since August last year, according to the South China Morning Post.
Analysts say the sales, via the investment company Hutchison Whampoa and some real estate trusts which he part-owns, indicate a concerted strategy to reduce Mr Liâs exposure to the Chinese property market. Li himself doesnât like the sales to be highlighted.
But he is not alone.
Other big property investors, while not necessarily selling out of China, have certainly been diversifying their portfolios away from its troubled real estate sector. And Australia is among the overseas markets being targeted.
Just last week, it was revealed Wang Jianlin, chairman of Wanda Group and the richest man on the mainland, has committed $1.7 billion to Australian real estate including the construction of a $900 million beachfront resort on the Gold Coast.
The investment is part of Wandaâs push overseas. In the last few years, it has spent $US2.6 billion on American movie theatre company AMC, bought British luxury yachtmaker Sunseeker and announced $US1 billion dollar hotel developments in London and New York.
Wang and others are looking abroad because in China, developers are struggling with falling prices, subdued demand and tougher credit conditions. Residential property sales fell 17.9 per cent in July from a year ago, while developersâ inventories of unsold properties are now 25 per cent higher over the same period.
On Monday morning there was more bad news as the National Bureau of Statistics reported home prices fell last month in 64 of the 70 surveyed cities.
Still, Chinaâs biggest residential property developer Vanke is keeping the faith.
After reporting over the weekend a small drop in first-half revenue and a modest increase in profits, Vanke said in a statement that in the long term âChinaâs urbanisation still has a long way to goâ and that would drive demand and âfuel expansion of this industry.â
But even Vanke acknowledges the current challenges.
âAlong with the transition from the industryâs golden age to silver age, the market will face greater short-term volatility, and competition between enterprises will intensify in future.â
Some of Vankeâs competitors are already feeling the effects of the transition to âthe silver age.â
High-profile mid-sized developer Shui On Land issued a substantial profit downgrade last Thursday after its sales more than halved in July. It expects earnings to slide 25 per cent in the first half, with the downgrade coming just one day after Chinaâs central bank announced a plunge in new lending during July.
And so the government is facing a series of tough choices on the policymaking front. Two years ago, rising anger over a lack of housing affordability forced provincial governments across the country to introduce a raft of property purchase restrictions. The new rules varied but buyers were limited in the number of houses and apartments they could purchase and larger down-payments and higher interest rates were required when buying second homes.
However, in recent months these restrictions have been reversed as the property market, which has been one of the biggest engines for Chinese growth over the past decade, cooled faster than expected.
Complicating matters, the governmentâs anti-corruption campaign has now extended to officialsâ vast real estate holdings. Last Friday, Chinaâs State Council issued draft rules for a property registration system, which would help the government track ownership across provinces and discourage speculation by preventing corrupt officials from building up large portfolios.
Some analysts believe it could also lay the groundwork for the introduction of a nationwide property tax down the track.
For now though, the focus is on reversing some of the purchase restrictions to stabilise the real estate sector, boost construction and revive sales of home-related goods.
The Australian Financial Review
PUBLISHED: 0 HOUR 2 MINUTES AGO | UPDATE: 0 HOUR 1 MINUTES AGO
Smart money long gone from China property
Hong Kong billionaire Li Ka-shing has sold about $3.5 billion worth of property on the mainland and in Hong Kong since August last year, according to the South China Morning Post. Photo: Bloomberg
LISA MURRAY
China economic outlook threatened by property decline
If Asiaâs richest man is any guide, the smart money started leaving Chinaâs property market a year ago.
Hong Kong billionaire Li Ka-shing has sold about $3.5 billion worth of property on the mainland and in Hong Kong since August last year, according to the South China Morning Post.
Analysts say the sales, via the investment company Hutchison Whampoa and some real estate trusts which he part-owns, indicate a concerted strategy to reduce Mr Liâs exposure to the Chinese property market. Li himself doesnât like the sales to be highlighted.
But he is not alone.
Other big property investors, while not necessarily selling out of China, have certainly been diversifying their portfolios away from its troubled real estate sector. And Australia is among the overseas markets being targeted.
Just last week, it was revealed Wang Jianlin, chairman of Wanda Group and the richest man on the mainland, has committed $1.7 billion to Australian real estate including the construction of a $900 million beachfront resort on the Gold Coast.
The investment is part of Wandaâs push overseas. In the last few years, it has spent $US2.6 billion on American movie theatre company AMC, bought British luxury yachtmaker Sunseeker and announced $US1 billion dollar hotel developments in London and New York.
Wang and others are looking abroad because in China, developers are struggling with falling prices, subdued demand and tougher credit conditions. Residential property sales fell 17.9 per cent in July from a year ago, while developersâ inventories of unsold properties are now 25 per cent higher over the same period.
On Monday morning there was more bad news as the National Bureau of Statistics reported home prices fell last month in 64 of the 70 surveyed cities.
Still, Chinaâs biggest residential property developer Vanke is keeping the faith.
After reporting over the weekend a small drop in first-half revenue and a modest increase in profits, Vanke said in a statement that in the long term âChinaâs urbanisation still has a long way to goâ and that would drive demand and âfuel expansion of this industry.â
But even Vanke acknowledges the current challenges.
âAlong with the transition from the industryâs golden age to silver age, the market will face greater short-term volatility, and competition between enterprises will intensify in future.â
Some of Vankeâs competitors are already feeling the effects of the transition to âthe silver age.â
High-profile mid-sized developer Shui On Land issued a substantial profit downgrade last Thursday after its sales more than halved in July. It expects earnings to slide 25 per cent in the first half, with the downgrade coming just one day after Chinaâs central bank announced a plunge in new lending during July.
And so the government is facing a series of tough choices on the policymaking front. Two years ago, rising anger over a lack of housing affordability forced provincial governments across the country to introduce a raft of property purchase restrictions. The new rules varied but buyers were limited in the number of houses and apartments they could purchase and larger down-payments and higher interest rates were required when buying second homes.
However, in recent months these restrictions have been reversed as the property market, which has been one of the biggest engines for Chinese growth over the past decade, cooled faster than expected.
Complicating matters, the governmentâs anti-corruption campaign has now extended to officialsâ vast real estate holdings. Last Friday, Chinaâs State Council issued draft rules for a property registration system, which would help the government track ownership across provinces and discourage speculation by preventing corrupt officials from building up large portfolios.
Some analysts believe it could also lay the groundwork for the introduction of a nationwide property tax down the track.
For now though, the focus is on reversing some of the purchase restrictions to stabilise the real estate sector, boost construction and revive sales of home-related goods.
The Australian Financial Review
