Country Garden’s Malaysia projects have been popular with some, including the Sultan of Johor, but Singapore is not a fan
Wednesday’s headlines are here and they are all about perspectives. For instance, while Chinese developers see opportunity in the Malaysian city of Johor Bahru, Singaporean see potential doom. Meanwhile, private equity firm Oaktree looks at China’s bad loans and spots something positive, while a beautiful swan sculpture in Beijing’s financial district was seen as bad news by investors. Continuing reading for all of today’s perspectives.
$100B Chinese-Made City Near Singapore ‘Scares the Hell Out of Everybody’
The landscaped lawns and flowering shrubs of Country Garden Holdings Co.’s huge property showroom in southern Malaysia end abruptly at a small wire fence. Beyond, a desert of dirt stretches into the distance, filled with cranes and piling towers that the Chinese developer is using to build a $100 billion city in the sea.
While Chinese homebuyers have sent prices soaring from Vancouver to Sydney, in this corner of Southeast Asia it’s China’s developers that are swamping the market, pushing prices lower with a glut of hundreds of thousands of new homes. They’re betting that the city of Johor Bahru, bordering Singapore, will eventually become the next Shenzhen. “These Chinese players build by the thousands at one go, and they scare the hell out of everybody,” said Siva Shanker, head of investments at Axis-REIT Managers Bhd. Read more>>
Mainlanders Push HK Developers For Land Sites
Hong Kong developers are finding it increasingly difficult to keep adding to their supply of land as their mainland counterparts push into the city’s property market, says JLL.
Mainland developers bid on around 62 per cent of the residential sites sold via government tender so far this year, up from 53 per cent in 2015. They won around 24 per cent of the sites in 2016, on par with the whole of last year. Read more>>
Oaktree Says China’s Rising Bad Debt Spells Opportunity
The world’s biggest distressed-debt investor says soured loans in China could become a big business for the firm in the longer term. Oaktree Capital Group LLC is currently evaluating a few opportunities in non-performing loans backed by real estate assets, according to Rajath Shourie, managing director at Oaktree.
The company invested in its first pool of Chinese bad loans backed by properties earlier this year by partnering with Shoreline Capital Management to buy assets in Shanghai. Read more>>
China’s State Sector Reverses 20 Years of Free Market Growth
Although China’s economic growth is widely expected to hit its annual target of 6.7 per cent for 2016, some observers fear it could start heading in the other direction, as a bloated state sector reverses nearly 20 years of declines, to raise its share of GDP, while private investment growth remains stagnant.
The latest government statistics show that the contribution made by state-owned enterprises to the Chinese economy rose for the first time since late 1990s. The China Statistics Year Book 2016, released earlier this month, shows the economic contribution of state-owned enterprises (SOE) in the industrial sector increased to 38.83 per cent in 2015 from 38.81 per cent in 2014 – reversing nearly 20 years of declines. Read more>>
Black Swan Sculpture Unnerves Beijing Investors
A black swan sculpture in Beijing’s financial district has been removed only hours after being unveiled because of concerns it might bring bad luck to the markets, it’s reported. On Monday, the huge swan was placed inside the entrance of a swanky shopping centre located across the road from China’s Securities Regulatory Commission (CSRC). It sat there for half a day before being covered up and whisked away by shopping mall staff, Beijing’s Fazhi Wanbao newspaper reports.
In financial circles, a “black swan” represents a highly unlikely and unpredictable event – something not much loved by investors. It’s not clear whether anyone from the CSRC complained about the swan’s presence, or if the shopping centre was just erring on the side of caution. Read more>>
China Pledges Clarity On Dealing With Land Lease Expiry Issue
China’s cabinet has pledged to come up with a plan to deal with the expiry of residential land leases, a critical issue given that the country’s hundred-trillion yuan worth of property assets are at stake.
In State Council-issued guidance on property rights protection, the Chinese government has for the first time vowed to “study the legal arrangement” for how to renew expiring leases on residential land. The contentious issue was in the spotlight in April this year with the upcoming expiry of 20-year residential land use rights in Wenzhou, which triggered a public outcry after the local government tried to charge homeowners for renewing leases. Read more>>
Tune in again tomorrow for more news, and be sure to follow @Mingtiandi on Twitter for headlines as they happen.
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