Tag Archives: Real Estate

Shenzhen faces quandary on real estate

Is Shenzhen really as dynamic a tech hub as it is made out to be, or is the story of its “economic miracle” of the past 40 years one that has been underwritten by an ever-rising property market? Investors and economists may soon start to understand this better.

Food for thought has emerged in the city government’s capitulation to property developers this week, as it eased its recent restrictions on land sales. Developers in the country’s richest city, home to Evergrande, are seeing their markets shrink at a previously unimaginable pace.

According to SCMP: Shenzhen has relaxed the conditions for taking part in land sales, one of the first among China’s local authorities to backtrack from the draconian measures that have sent the entire country’s real estate industry into a tailspin. The bureau put 11 plots on the market last week, the third land sale this year.

The news was quickly followed by another report (Yicai) indicating that the city’s property market was plunging. Although prices in the overall market have not yet dropped, edging up slightly in September for new homes and dropping slightly in the secondary market, October figures show volumes falling to levels not seen in nearly a decade. Some 1,605 second-hand homes were sold, down 9.1 percent from September, according to data from Centaline Property’s Shenzhen research center.

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GBA News: 11/03/2021

Shenzhen relents on land sales

Shenzhen has relaxed the conditions for taking part in land sales, one of the first among China’s local authorities to backtrack from the draconian measures that have sent the entire country’s real estate industry into a tailspin. According to the new rules laid out by the Planning and Natural Resources Bureau of China’s technology metropolis, more than one developer will be allowed to bid for land at the same price, where the competition will be based on how many homes they can build under the “affordable” price category. The bureau put 11 plots on the market last week, the third land sale this year. The relaxation followed a disastrous round of land sales when 206 land parcels were withdrawn from auctions around the country since September, as the central bank’s tight caps on loans backfired and drove cash-starved and risk-averse developers to the sidelines. The tepid uptake was also the market’s response to the government’s move to centralise land sales across 22 large cities into three annual auctions. SCMP

HK expats buy more abroad

More Hong Kong-based expats are buying properties in their home countries or other overseas markets, boosting the number of transactions by 30 to 40 per cent this year, according to agents and bankers. If the trend holds, Hong Kong’s population of expatriates – who account for a large portion of the home leasing market in the city, particularly the high-end segment – will decline, likely impacting the overall rental market, analysts said. The number of persons employed by companies whose parent firms are located outside Hong Kong has fallen to 473,000 this year, down 4 per cent from the peak of 493,000 in 2019, the latest figures from the government showed, suggesting fewer foreign-born residents in the Asian financial hub. SCMP

Ping An scores poorly on coal exit plan

Chinese insurers have performed poorly in a global ranking that examines the industry’s approach to fossil fuel exit policies, with Shenzhen-based Ping An Insurance ranking just 21st among 30 companies assessed with two other Chinese insurers ranking even lower. The scorecard – called “Insure our future” – is in its fifth year and is published by a global NGO coalition group under the same name. It focuses on the 30 most important insurers in the power sector worldwide, and ranks them according to their policies on coal, oil and gas insurance, and their overall approach to exiting fossil fuel. Progress on both their underwriting standards and investment policies is assessed. SCMP

Foshan too dependent on property

Research by GoguData, a Shenzhen-based advisory firm, paints a worrying picture for cities with high exposure to the property market. More than 20 large and medium-sized cities were found to be highly dependent on land-sale revenue. The list was led by Foshan, a city in the Greater Bay Area well known for its ceramics industry, as land-sale income was 1.8 times that of its total budgetary fiscal revenue, which excludes land sales and central government transfers. SCMP

Nanshan tops China’s districts

Shenzhen’s Nanshan district, home to its top tech companies such as Tencent, ranked first among the top 100 Chinese districts this year, followed by Guangzhou’s Tianhe district and Shenzhen’s Futian district, a report from CCID Consulting said. China Daily

Macau records worst-ever October, but visitors are coming back

Macau has just seen its worst gross gaming revenue (GGR) for October – typically the highest month of gaming revenues – due to the string of Covid-19 cases in the city in late September which led to the tightening of entry and exit regulations. Data from the Gaming Inspection and Coordination Bureau shows that casino revenues fell to as much as 40% to MOP4.37 billion, the lowest figure this year. MDT.

However, since the quarantine restrictions imposed by neighboring Zhuhai were lifted on October, visitor numbers have recovered to their previous levels before the lockdown. The city’s tourism chief expects them to average 30,000 a day until the end of the year. GGRAsia

Bell tolls for HK property giants

Sun Hung Kai Properties has said it is not aware of any attempt by Beijing to influence Hong Kong’s leading property developers to donate land for development as part of the government’s attempts to address the city’s housing crisis. It has, moreover, started to build  flats as small as 80sqft, as prices continue to soar amid a supply crunch. Most of its peers are not much better, with Wheelock, Henderson, and New World ganging up (yes, that is an appropriate word in this context) to build flats starting at 120sqft.

It seems logical to look around the rest of the GBA and wonder if Hong Kong’s exceptionalism is likely to continue for much longer where its property market is concerned. As has been shown with the slow-motion bankruptcy of the country’s second-largest property developer, China Evergrande, the central government is clearly determined to kill two birds with one stone: rein in runaway property prices, which have long been the single biggest complaint of the masses; and reduce debt levels that have built up to unsustainable levels in the sector over the past decade. It has made its intention clear to Hong Kong’s CE, Carrie Lam, who appears to be preparing a major speech centered on tackling the city’s acute housing crisis, that she must do the same in Hong Kong. Lam, for her part, has politely acknowledged that the property barons have been “more willing to cooperate” recently.

As has been written here before, Hong Kong has a role model to follow in Shenzhen, which this year will bring 100,000 new units into the market. It has also gone so far as to cap land auction prices, and has started to guide prices downward for property agents in the secondary housing market, which has caused a shock.

It would still appear, however, that Hong Kong’s mighty developers cannot quite put two and two together. That they can still think Hong Kong is run according to rules that benefit them exclusively is a measure of how long it has gone on for: they obviously still feel a certain immunity to the change that is sweeping the rest of the country. It is either that, or they know something about factional-regional political resistance to the Common Prosperity drive that no one else does.

Either way, Lam’s Policy Address will clarify all, fairly soon. The smart money would be on her unveiling a large-scale plan to fill in the sea off southern Lantau, which will take a long time to produce livable housing. But it is starting to look more possible that Lam will also be able to double down and take back land more aggressively from the hoarders developers than they might currently be imagining. Could Hong Kong replicate Shenzhen’s feat, which took five years to bear fruit?

It will be interesting to see. All the signs are there that the next few weeks will be the last hurrah for a group of geriatric men (and their sprightly offspring) who have jammed the people of Hong Kong into cages, literally and figuratively, for decades.

Hong Kong home prices set for record

Hong Kong’s homes, already the world’s most expensive, are set to reach new record highs this year, according to financial giant JP Morgan. As quoted in SCMP, the city is expected to see its housing market continue to inflate this year, with prices likely to rise by another 10%-20%, JP Morgan’s head of Asian property research, Cusson Leung, says.

Quantitative easing – more money in the hands of investors, in other words – and short supply, combined with demand from local users, are driving the market’s climb, Leung says.

This is despite “real and painful” talk of Hongkongers leaving the city, as a Bloomberg opinion piece states, following the protests of 2019 and the implementation of new national security legislation. Leung questions whether people leaving Hong Kong are mostly home-owners, and if they are, how many would be selling their properties now.

On a more light-hearted note, the SCMP also carried a report comparing the cost of a luxury flat in Hong Kong and an ancient Italian castle, asking whether anyone would rather live like a duke or squeeze into a few thousand square feet of space.

More on prices and living like a duke.

Shenzhen to add 100,000 housing units

Shenzhen has released its housing plan for 2021, which shows a surge in addition of new units into the market this year: 60,000 commercial flats, 40,000 public (subsidized) flats, and 100,000 rental units (rooms).

Hong Kong, by contrast, plans to have around 7,000 new units on the market this year.

The plan for Shenzhen shows that 149.3 hectares of land for commercial housing will be released into the market this year, of which 58.3 hectares will be for new supply and 91 hectares will be reserved for urban renewal.

The plan envisages approving applications for commercial housing of ​​6 million square meters, or about 60,000 units. This would include flats approved for pre-sale.

Public housing will cover 214 hectares of land, including 74 hectares for new supply, 19 hectares for renewal and reserve land, 81 hectares for the demolition and reconstruction of old residential areas (shanty town reconstruction), and 40 hectares for other (including industrial reform insurance). This will see around 40,000 units come onto the market.

Rental housing will cover 37 hectares of land as the city plans to provide 100,000 rental housing units (rooms).

Read more on SZNews

GBA property in 2019: Zhuhai, Shenzhen lead surge

The Greater Bay Area’s property market was generally stable last year, with two exceptions: Shenzhen and Zhuhai, where transaction growth was hot. 

According to local media, which reported on an analysis of official data by Penguin Financial, an investment adviser, Shenzhen was the beneficiary of policymaking in Beijing. The city’s designation as a Pioneering Zone for Socialism with Chinese Characteristics boosted market sentiment, resulting in new residential floorspace of 4.5 million sqm, up nearly 25%, while 37,846 homes were sold, up nearly 27.4%.

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Tale of two cities’ housing markets

The contrast between Hong Kong and Shenzhen could not be starker than in their respective plans for subsidized, or social, housing. While Shenzhen is targeting a surge over the coming two years, putting as many as 300,000 units on the market, Hong Kong has announced it will likely be able to build no more than 13,400 units in the current year, well down from its initial target of just 18,000 for the fiscal period ending in March.

Shenzhen plans to sell 600,000 new homes between now and 2022, of which rental units will be no less than 300,000, it was announced this week. This is part of the city’s bigger urban development plan, unveiled in August last year, which will see 1.7 million new houses built by 2035, with more than 1 million being subsidized.

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Shenzhen moves to dampen housing rebound

Shenzhen’s Housing and Construction Bureau has acted to dampen speculation in the city’s housing market, targeting WeChat users who had been allegedly trying to engage in “collective pricing” actions.

The bureau said that anyone who was found to have engaged in such speculation would see their secondary housing online signing procedures suspended.

Estates in the spotlight were named as Shenzhen Hengyubin City, Zhongliang Fenghuangli Garden, and a few others.

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