Poly Real Estate H1 profit down 10.16%

BEIJING - Poly Real Estate Group, China's second-largest property developer, said Wednesday its net profit dropped 10.16 percent year-on-year in the first half to 2.51 billion yuan ($396.22 million).

Poly said in a statement filed with the Shanghai Stock Exchange that the decline was mainly because its partners in several real estate projects took a larger share of the profits in the first half.

Its revenue rose 32.86 percent from a year earlier to 20.18 billion yuan. Earnings per share dropped 10.16 percent to 0.35 yuan, the developer said.

Poly's home sales rose 27.47 percent year-on-year to 50.3 billion yuan in the first half due to intensified efforts in promoting the sales of small and medium-sized apartments, it said.

The Chinese government has adopted a series of tightening measures such as prohibiting purchases of third homes and raising the down payment requirement since 2010 to cool the then-runaway property market.

Senior Chinese leaders have repeatedly pledged that the country will continue its property tightening measures despite a slowdown in national economic growth.

Poly's shares dived 3.46 percent to 9.49 yuan on Wednesday.

Source: http://www.chinadaily.com.cn/business/2012-08/23/content_15700033.htm

Home prices to dip, but tumble unlikely

By Hu Yuanyuan

BEIJING, May 25 (Xinhuanet) -- Property prices will dip this year but a tumble is unlikely, a report by the China Academy of Social Sciences said on Thursday.

Sluggish demand has ruled out big price increases while property developers are unlikely to slash prices because of high land costs, according to the academy's annual report on real estate.

"Property sales will remain low this year, despite a rebound since March, and prices will dip," said Li Enping, associate professor at the Institute for Urban and Environmental Studies under the academy, a major contributor to the report.

Property prices in small and medium cities that have increased recently will experience the biggest fall, according to the report. And any dip in prices should, eventually, stimulate sales, due to the rapid urbanization process.

Home prices in key cities, such as Beijing and Shanghai, will only dip marginally even though sales may be sluggish, the report claimed.

With a slew of rigorous measures in place, including tighter lending policies, higher down payments and a ban on third-home purchases, the property market has entered a period of cooling.

Out of 70 major cities tracked by the government, 46 recorded a year-on-year price fall in April, eight more than in March, the National Bureau of Statistics showed.

"Policy fine-tuning has been taking place and the worst time for property developers is, in fact, over," Zhang Hanya, chairman of the Investment Association of China, said. Zhang is a former director of the Investment Research Institution with the National Development and Reform Commission.

More than 30 local governments have introduced measures to revive their residential markets, Nanfang Daily reported.

"The government has to fine-tune real estate policies due to the economic slowdown," Zhang added.

GDP growth eased to 8.1 percent in the first quarter from 8.9 percent in the fourth quarter of last year. The State Information Center, a government think tank, forecast that GDP growth will slow further to 7.5 percent in the second quarter, due to property curbs and sluggish external demand.

Though the real estate sector's direct contribution to GDP stood at 4 to 4.5 percent, other industries involved in the sector will contribute nearly 20 percent to GDP growth, Zhang said.

"Given the economic slowdown, it is understandable that the government will fine-tune its real estate policies. But it is unlikely that the government will change existing policies radically as it did during the 2008-09 period," Zhao Song, director of the land pricing department at the Ministry of Land and Resources, said.

Zhao believes that the land market is showing obvious signs of cooling, and government revenue from selling land will fall.

"Land prices fell in the first quarter after seeing zero growth in the last quarter of 2011," Zhao said.

According to a report by Centaline Group, land sales hit a four-year low in the first four months of the year despite a slight rebound in new home transactions.

The total value of land purchases by the top 10 property developers in the first four months reached 18.9 billion yuan ($2.99 billion), a year-on-year decline of 63 percent. The level of land purchases is the lowest since 2008, according to the report.

"We believe the government is not likely to reverse residential market policies in the near term. Nonetheless, as we expected, there are policy fine-tuning to improve affordability for first-time buyers," said Joe Zhou, head of research for real estate service provider Jones Lang LaSalle (Shanghai).

The People's Bank of China has urged major banks to both increase the availability of mortgages for first-time buyers and to offer them more affordable mortgages. First-time buyers are now able to receive a 10 or 15 percent discount from the base-lending rate.

Standard & Poor's expects government restrictions on home purchases to remain in place for the rest of this year in many cities.

Source: China Daily)

Foreign real estate firms exiting capital

BEIJING - An increasing number of foreign real estate companies left Beijing last year, an occurrence that industry analysts said will not have large consequences for China's property market.

The Beijing Administration for Industry and Commerce said 217 foreign property enterprises exited the city in 2011. And only 129 foreign real estate companies were established in 2011, down 55.82 percent from 2010.

Foreign firms' numbers increased in the real estate business much more slowly than in other industries. More than 2,900 foreign companies were established in 2011, down 7.12 percent from the year before, the bureau said.

"The presence of few tradable assets in Beijing, tightened credit policies and greater obstacles to bringing in money are the main reasons why foreign capital is leaving the city's real estate market," said Carlby Xie, head of research at the real estate consultancy Colliers International (Beijing).

The Chinese government adopted a slew of measures last year to cool down the sizzling property market, narrowing the supply of loans to property developers and individual buyers, restricting the number of homes a family can buy and insisting that higher downpayments be made on home purchases.

"But just because foreign real estate companies are leaving Beijing, that doesn't mean they are leaving the country," Xie said. "And since foreign investors had a small share of the market, their leaving is not likely to have great consequences."

In Beijing, about 10 en bloc sales transactions were concluded and disclosed in 2011. Foreign firms had little part in them, and domestic investors - State-owned enterprises, financial institutions and private developers - continued to dominate the market, according to a recent report by Colliers International.

Frank Marriott, senior director of Savills' Real Estate Capital (Asia Pacific), had similar thoughts.

"Though the office markets in Beijing and Shanghai are still the favorites for international institutional investors, especially core real estate funds that prefer relatively lower risks, there are few investment opportunities for international funds in these two office markets as the supply is limited and the competition is fierce," Marriott said.

According to Marriott, international funds are looking at investing in residential property and at opportunities in second-tier cities.

"Some international funds did sell their projects in China, but the major reason for that was that their investment period had come due, rather than any pessimism about the country's real estate sector," said Chris Brooke, CEO of CB Richard Ellis Asia, part of the CB Richard Ellis Group Inc.

"International investors still have a strong interest in the Chinese property market," Brooke added.

Source: http://www.chinadaily.com.cn/cndy/2012-02/17/content_14628487.htm

China's Property Malaise Ripples Wider

BEIJING—China's property prices fell for the fourth straight month in December, adding further pressure on Chinese consumers at a time when both the domestic and global economy increasingly depend on their spending.

The property slump has triggered a slowdown in sales growth of goods ranging from furniture to refrigerators. Investment in residential real estate accounts for about 12% of China's economy, but as much as 25% is tied up in a broader category that also includes industries such as construction materials and appliances, according to economists.

The government had hoped that its efforts to rein in soaring real-estate prices would mean more Chinese would be able to buy homes, which in turn would keep demand for home furnishings humming. But the uncertainty around housing prices has scared away many new home buyers, making for a deeper-than-expected impact on the housing market and beyond. That could complicate China's efforts to manage a slowdown in its economy, which is increasingly geared toward domestic consumption at a time of declining demand from Europe and the U.S.

At a home-furnishings market recently on the eastern outskirts of Beijing, Zhang Shuangxia, a manager of closely held Canaan Furniture Co., sat on a floral couch that has gone unnoticed by her dwindling number of shoppers. "The entire shopping plaza has been empty," Ms. Zhang said.

The drop in customers, which Ms. Zhang estimated at about 50%, reflects the standstill in the housing market, she said. "If they don't buy homes, we don't sell sofas," she said.

Average housing prices in 100 major cities in China fell 0.25% in December compared with November, according to data released on Wednesday by data provider China Real Estate Index System, as the central government continues its campaign to keep housing affordable. In 31 cities across China, developers sold 134 million square meters of residential real estate from January to October of last year, down from 150 million square meters of space in the 2010 period, according to data from Standard Chartered. Sales continued to slide in November.

Consumer spending tied to the housing sector appears to be slipping too. Growth in sales of home appliances in the first 11 months of last year slid to 15% from 24% in the 2010 period, according to National Bureau of Statistics data that have been adjusted to account for inflation. Growth in furniture sales in the period slowed to 26% from 34% in 2010. The growth-rate declines were also felt in the overall retail sector.

At the furniture mart outside of Beijing, Li Wei, the manager of a store called Fashion Furniture, sells home basics such as bookcases and beds but doesn't have extras such as baby cribs and house slippers that have helped a store like IKEA shield its sales from the property slump.

Mr. Li's store had sold much of its wares to customers buying homes in a neighboring suburb called Yanjiao. But Yanjiao's fifth phase of a 50-building development is vastly unoccupied. "Our sales have plummeted," Mr. Li said.

The sluggish property market is causing investor concern about home appliance makers and retailers, said Forrest Chan, an analyst at CCB International (Holdings) Ltd, China Construction Bank's investment arm.

The stock price of Suning Appliance Co. Ltd., a Chinese appliance retailer, has dropped 35% in the past six months. Its rival GOME Electrical Appliances Holding Ltd.'s stock price fell 41% over the period, compared with a 23% drop of the Shanghai Stock Exchange Composite Index.

Suning declined to comment. A spokesman for GOME said demand for appliances is still growing in China's smaller cities, where the retailer is expanding.

Investors have already pulled back from the home-appliance sector, as government subsidies that allowed consumers to trade in their old appliances for new ones at a discount ended at the beginning of 2012, Mr. Chan said.

Some analyst say that the government's restrictions and tightening measures over the past year, such as higher mortgage down payments, to control the property market have led to a healthy price decrease. "If more middle-class Chinese can afford to buy homes, there will be more buyers of washers and refrigerators," said Wei Xiaopo, an analyst at CLSA Asia-Pacific Markets.

But Ma Yanfei, a business director at Boloni Home Décor Co., says he awaits the day people start buying again. Sales contracts are dropping at the private Beijing-based interior-decoration company. New business has dropped 30% from August, with the decline coming largely from markets like Shanghai, Hanghzhou, and Chengdu, where property markets have reacted strongly to government restrictions, Mr. Ma said.

"If it continues, we'll have to lay people off," said Mr. Ma.

Swedish furniture maker IKEA Group says its sales haven't been hurt. IKEA has protected itself from real-estate shifts by marketing itself as the go-to spot for "changes in living situations," such as new babies, house guests and seasonal changes, not just new homes, said IKEA spokeswoman Yvonne Yin.

"We haven't seen sales drop in the markets in China. On the contrary, the growth of IKEA China is positive," she said.

Source: http://online.wsj.com/article/SB10001424052970204331304577140274059333142.html?mod=WSJ_article_comments#articleTabs%3Darticle