Slow sales continue in China’s property market
March 26, 2019 Category China News Round-up, Weekly
China’s residential property companies keep on suffering from slow sales and are hence resorting to fresh discounts to destock. Xu Jiayin, Chairman of Evergrande Group, announced a marketing campaign this month. The group has 690 projects, and will offer a 10% discount on residential properties, and 20% on retail properties. Since 2011 Evergrande has been offering discounts to homebuyers. It sold 52.4 million square meters of gross floor area in 2018, second only to Country Garden’s 77.3 million sq m, according to the China Real Estate Information Corp. Home sales have brought in CNY551.1 billion for Evergrande last year. It ranked third among domestic developers, trailing Country Garden (CNY728.7 billion) and China Vanke (CNY606.9 billion).
“The central government is expected to continue its tight control on the real estate market and strictly supervise real-estate financing, a situation which will cause some challenges to developers through 2019,” said James Shepherd, who heads China-related realty research at Cushman & Wakefield. The Top 100 property developers in China saw a month-on-month sales revenue decline of almost 23% in February, and that for the top three was nearly 11%. Evergrande’s contract value of total sales in January and February was about CNY64.7 billion, down 42.5% from a year ago.
The sales decline is across the board. In the housing market, some 9.6 million sq m of gross floor area were traded in 29 major cities in February, down 53% from January, and down 28% from the same period of 2018, a CRIC report said. Yu Liang, Chairman of Vanke, has called upon the company to keep focus on survival this year. Since February 12, widespread layoffs have been reported in Country Garden with some divisions getting downsized by half. A Savills China research report stated that in the short term, China is not expected to expand financing channels for real estate companies. However, large-sized companies will continue to have more advantages in receiving loans. Meanwhile, the government would continue to allocate resources to promote development in areas such as renovation of shanty towns, affordable housing projects and rental housing, the China Daily reports.
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