The latest data on China’s residential real estate market is out, and the indicators continue to point down, with some analysts predicting a net 15% downturn this year compared to 2011 values.
In a report this week from Soufun and China Real Estate Index System (CREIS) the average price for housing in 100 of China’s major cities dropped for a fifth straight month in January, although the rate of decrease had moderated compared to what was seen in December.
Among the 100 markets surveyed, 60 cities recorded a drop, with 39 communities seeing a price increase. Prices are still higher than at this time a year ago, however, with the average price nation-wide of a new home in January 1.71% higher than in the same month in 2011.
According to an article in Dow Jones Marketwatch,
China Real Estate Index System said the survey of property developers and real-estate agencies showed the average home price in January was 0.18% lower from a month earlier at CNY8,793 a square meter. The average home price in December stood at CNY8,809, down 0.26% from November’s CNY8,832. The survey, which the company compiles together with online real-estate brokerage SouFun Holdings Ltd., has been widely followed since China scrapped a national property price index in February last year.
Meanwhile over in the US, market watchers are predicting a continuation of China’s residential real estate decline in 2012. Speaking at the Bloomberg Link China conference in New York on February 1st, Sonny Kalsi, a founder of GreenOak Real Estate and former global co-head of property at Morgan Stanley, commented,
“I don’t think China’s going to blow up, but prices are ahead of affordability, At a minimum, it will take some time for growth to catch up to valuations. On the less generous end, we could have real price declines of 10 to 15 percent.”
For investors wondering where former Morgan Stanley big-shots who drove through Shanghai and Beijing once and were warmly welcomed to China by their office staff would put their Middle Kingdom kuai, Kalsi further asserted,
Opportunities for investors are in “budget retail, budget hotels, not five-star hotels, affordable housing,” Kalsi said. “It’s not Class A office buildings.”
As I recall, Morgan Stanley didn’t do all that great with budget hotels in China, but I guess the point of speaking at conferences is more about making bold statements than making supportable assertions.
Leave a Reply