China Vanke Co., the nation’s biggest developer, is focused on developing homes for owner occupiers rather than investors because the country’s property industry has passed its “golden era,” said President Yu Liang.
“The period in which everybody makes money out of property is gone,” Yu told reporters May 26 in Dongguan, a southern city in Guangdong province. “Vanke will take a cautiously optimistic approach to face the slowdown and target those buyers who need homes for self-use.”
Pressure on Chinese developers was underscored by the collapse of a developer in a city south of Shanghai in March. Yu’s comments come after Moody’s Investors Service revised its credit outlook for Chinese developers to negative from stable last week.
 |
Residential apartment buildings are illuminated at night along the Zhujiang River in Guangzhou, Guangdong province, China. (Bloomberg) |
Moody’s forecast year-on-year home sales growth will slow to at most 5 percent in the next 12 months, from 27 percent last year. Yu said China’s market is still big enough and China Vanke will keep residential property as its main business over the next 10 years.
The value of new homes sold in 2013 rose 27 percent from 2012 to 6.8 trillion yuan ($1.1 trillion), according to National Bureau of Statistics.
While the company has offered promotions including discounts for group purchases, “cutting prices will not solve every problem unlike in the past, because that won’t help sales of some high-end homes,” Yu said. Developers including Vanke and Greentown China Holdings Ltd. have cut property prices since March to lure homebuyers, according to China Real Estate Information Corp.
Vanke is also interested in investing in industrial property and homes for the elderly, Yu said.
China’s new-home prices rose in April in the fewest cities in a year and a half, while home sales fell 18 percent from March, according to the government data.
“The market is far from its big turning point,” the company’s board secretary, Tan Huajie, said in the same briefing. “As the big brother in the industry, we are responsible to alert risks, but it doesn’t mean we are bearish on the property market.”
While 12 of 18 economists say China has some oversupply of housing, only seven say the market is in a bubble state countrywide, according to a survey conducted from May 15 to May 20 by Bloomberg News. Half see a bubble in some cities, and a majority say the loosening of restrictions on home purchases and loans will be limited to a regional level.
Vanke’s A-shares rose Tuesday to the highest in almost two months, increasing 0.7 percent to 8.17 yuan in Shenzhen.
The developer, which has approval from regulators to convert China-traded B-shares to shares in Hong Kong, will be listed in the city’s stock exchange as soon as late June, Yu said. He said the company doesn’t have any financing plans after the listing.
The developer is seeking to exit the B-share market, which has languished after the nation opened its local-currency stock markets to foreign investors. The company has set June 3 as the last trading day of its B-shares. (Bloomberg)
