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Weak property market cools investment drive
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THE cooling real estate market in China greatly dampened property developers’ willingness to expand investment in the first half of the year, a market analyst has said.
This was reflected by a sharp slowdown in investment growth and in particular, a plunge in the number of new projects launched, said Meng Yin, vice secretary-general of the China Real Estate Research Association Market Committee.
Combined with the falling property sales, it is predicted that investment in the sector will remain sluggish in the next few months, Meng said in an article in the latest edition of Beijing-published Caijing Magazine.
She said that property investment by developers grew 16.4 percent year on year in the January-April period, but the growth rate fell by 3.4 percentage points from a year ago. Government data showed investment in January to May further slowed to 14.7 percent.
Meanwhile, Meng said that 430 million square meters of new projects were launched during January to April, down 22.1 percent year on year by floor space. Newly launched projects in January to May plunged 18.6 percent year on year.
The investment slowed as property sales fell 7.8 percent in the first five months of the year, with the decline widening by 0.9 percentage points compared to the first four months, according to government data.
Meng said that the Chinese property market had witnessed adjustments almost every three years since 2005. Unlike on those occasions, however, the adjustment this year was largely brought about by the market itself, influenced by supply and demand, and prices, she said.
Faced with the new situation, Meng said that property developers may be forced to adopt more discreet development strategies as opposed to rampant investment and high liabilities. They may also seek to diversify their businesses to hedge against potential risks.
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