Shui On Sees No China Property Easing until 2013
Chinese property developer Shui On Land Ltd has no plans to acquire new sites any time soon as it expects no major relaxation in government efforts to curb real estate speculation until 2013, its chief executive said on Thursday.
Freddy Lee told Reuters he expected home buyers to begin returning to the market in the second half of 2012 as no further property tightening is anticipated, which would drive up transactions although he forecast a further fall in prices of 5-10 per cent before year-end.
“In the rest of this year till early next year, there will be no big changes in China’s property policies,” he said. “Currently, we don’t have any plan to buy land, as we have enough stock in hand.”
The company has a land bank of 11 million square metres, including six million square meters for commercial property development, which will be enough for its expansion in the next eight to 10 years ‒ a typical size land stock for Chinese developers.
Most of its peers have adopted similar strategies under Beijing’s efforts to bring home prices back to a reasonable level, a two-year-plus campaign that has squeezed cash flows of many developers with a record stockpile of unsold homes, which will take a year or so to sell down in key cities like Beijing and Shanghai.
However, a sharper-than-expected slowdown in the Chinese economy in April has fuelled market expectations for possible loosening of property curbs, such as a cut in down payments and mortgage rates for first-time home buyers, to stimulate investment in the real estate sector, which accounted for 13 per cent of China’s gross domestic product in 2011.
“Although the macro environment is not good, property policies will not be relaxed immediately,” Lee said. “The government can speed up investment in many other sectors, or relax lending. But the money will not necessarily flow into the real estate sector.”