Sinopec will build a CNY7 billion petrochemical complex in Chongqing with BP and South Korea’s SK Group. The three companies signed a memorandum of understanding for the project which will include a 600,000 ton-a-year acetic acid plant and a 200,000 ton-per-year bio-butanediol (BDO) facility. The acetic acid plant will be built by a joint venture that is 51% owned by BP, 44% held by Sinopec and 5% by Chongqing Energy Investment Group. An equally-owned venture between SK and Sinopec will invest in the BDO plant. The complex may consume about 440 million cubic meters of natural gas per year. Sinopec holds large gas reserves in Chongqing and Sichuan province. The partners have completed a feasibility study for the project and submitted it to the government for approval, and intend to complete the project in phases in 2015.

Rents of unfurnished three-bedroom flats in Hong Kong in the luxury category average USD11,813 per month, the highest in the world, according to consulting firm ECA International, which helps companies manage their expatriate employees. Rising demand pushed luxury residential rents in the city up 15% year-on-year in 2011, one of the steepest jumps in the region. In terms of top-end rent, Hong Kong leads Tokyo, Moscow, New York and London, the consultancy said in its annual accommodation report, which surveyed rents in more than 130 locations worldwide, concentrating on areas and unit types commonly sought by expatriate employees. “The number of expat employees in Hong Kong has increased again over the past two years, contributing to the demand for rental accommodation,” ECA International Regional Director Lee Quane said. “This comes at a time when a significant proportion of the local population, unable to buy property due to steep increases in property prices, is looking to rent instead. This has put renewed pressure on the already limited supply of rental property here, resulting in these large rent increases,” he said. At the very top end of the rental market, Hong Kong remains the most expensive location, with a three-bedroom apartment in an area like The Peak averaging about USD19,900 a month. However, at the lower end of the market, Hong Kong does not figure at the top. According to the report, the city falls to the fifth spot while Tokyo takes the top position when less expensive property is considered. The ECA report showed that more than 90% of companies that sent employees on international assignments contributed to the cost of accommodation in the host country. For companies, this can be one of the most significant assignment costs, the consulting firm said. Shanghai remained in 18th position globally, while Beijing had slipped two places to 26th, the South China Morning Post reports.

Easier access to credit for developers is unlikely to stop home prices from falling, according to analysts. Their comments follow the decision by the People’s Bank of China (PBOC) to lower banks’ reserve requirement ratios (RRR), which is the percentage of deposits they are obliged to keep in reserve, by 50 basis points. The move, effective from February 24, will lower the reserve ratio to 20.5% for larger banks and 18.5% for smaller lenders, releasing an estimated CNY400 billion in additional lending supply. “Developers have a strong demand for capital to kick-off new projects but liquidity has been tight for the past six months – the adjustment to the reserve ratio will provide more money for construction work to start,” Alan Chiang at property consultancy DTZ, said. He expected that it would take about two months for the additional pool of lending created by the move to find its way into the hands of developers and flat buyers. It could then boost sales since it would help developers to launch new projects, and buyers to get mortgage loans. “Transaction volumes could increase by 10% month-on-month in April, although prices may continue to decline slightly because of abundant supply,” he said. However, the relaxation of credit conditions signaled that the toughest period for property developers was over and that Beijing was pursuing a looser monetary policy. David Ng at Macquarie Capital Securities did not expect the lowering of the reserve ratio to be strong enough to boost buying confidence instantly. Du Jinsong at Credit Suisse, believed the adjustment would have only a minimal impact on the sector, partly because the move was “largely anticipated”.

The total primary residential area transacted in 20 major cities dropped 6.4% quarter on quarter in the fourth quarter of last year, or a significant 45.4% rate year on year. Only Haikou and Jinan registered year-on-year growth in transacted area, while other cities saw drops of between 20% and 73%, with Shanghai, Chongqing, Hangzhou, Suzhou, Tianjin and Dalian recording transaction falls of more than 50%. Owing to the drop in sales, the inventory level in the major cities increased a further 14.2% on the quarter. If the rate of sales stays the same as last year, it will take at least 17 months for this inventory to be absorbed. Guangzhou saw a drop in sales volume of 70% from a year earlier. This was followed by a 68% slump in Beijing and a 62% dive in Shanghai. It is becoming clear that the central government’s policies are having the effect intended on the market, and the question now is how long the authorities intend to keep those policies in place. In the fourth quarter, prices of new homes adjusted by differences in property type, location, fittings, and whether they were pre-sale or completed units, fell 2.3% from the preceding quarter. It was the first drop in this industry measure since early 2009. As major corrections in home prices are still to be seen, the central government is expected to continue its austerity measures in the short term to prevent social unrest from high home prices, the South China Morning Post reports.

Shanghai has eased restrictions to allow non-locals to buy a second flat, a move analysts say will push up home sales by 20% in the city. The latest easing comes a week after the city government sought to stimulate end-user demand by changing the definition of “ordinary housing” to lower the property deeds of more homes. The authorities are now allowing non-locals who have lived in the city for at least three years to buy a second home. Home sales in the city last year were 43% below the annual average for the past five years, Alan Chiang, the head of residential property for greater China at DTZ said, adding he expected sales to rise 20% following the new rule. About 671,000 non-locals in Shanghai had been issued with residence permits as of March 2009. Chiang said other cities would follow Shanghai’s footsteps if there was no objection from the central government. Following news of the easing, property stocks surged. More than 14 cities including Shanghai, Beijing, Hangzhou, Hefei, Wuhan and Guangzhou have either been easing criteria for housing to help more people qualify for preferential tax treatment or relaxing land sale policies. On February 12, Premier Wen Jiabao said the central government would not waver on real estate controls and efforts to bring prices down to a reasonable level.

Wal-Mart Stores will acquire a 51% controlling stake in Yihaodian, a Shanghai-based e-commerce website. The U.S. retailer already bought an unspecified minority stake in Yihaodian last year. Yihaodian’s sales more than tripled to CNY2.72 billion in 2011. China’s online retail sales jumped 55% to CNY806 billion last year, Analysys International said. Wal-Mart wants to gain experience before launching its own e-commerce services. It is already providing online shopping services to Sam’s Club members in Beijing and Shenzhen.