Vanke offers festival house discounts of 5%

China Vanke Co Ltd, the country's largest publicly listed real estate developer, is planning to launch big sales promotions in Shanghai on Thursday, the company said.

The Shenzhen-based company, China's biggest residential property developer, will offer discounts of as much as five percent to local home buyers on Thursday, the Lantern Festival, following similar promotions in other Chinese cities, including Guangzhou and Shenzhen.

Buyers who sign home purchase agreements with the company on that day can gain the largest discounts Vanke has offered in Shanghai since 2007, industry people said.

About 10 Vanke projects on sale - including residential and commercial properties - will be open for the promotions, the company said.

The company said it would likely offer the discounts annually in the future to reward clients, according to media reports.

Vanke is among the first developers to launch sales offers after China's real-estate market cooled in response to the central government tightening lending.

For example, in January, a Vanke residential project in Chengdu, Sichuan Province, was sold at between 4,500 yuan (US$626) and 4,600 yuan per square meter, much lower than the asking price of more than 6,000 yuan two months earlier in the same area.

Wang Shi, chairman of Vanke, said that price cuts were the company's response to a changing market.

As the country's leading residential property developer, Vanke's price cuts may trigger similar approaches by other developers, industry analysts said. "It is often the case that price cut promotions launched by one developer, especially big companies, in one area will probably be followed by its counterparts due to intensive competition among real estate companies," said Fan Weiguo, deputy general manager with Shanghai Hanyu Property Agency Ltd. "That is the so-called chain reaction scenario frequently seen in the real estate industry."

In Guangzhou, for instance, China Merchants Property Development Co and Gemdale Group, two major real estate developers in the country, have already launched similar promotions following Vanke.

Statistics show that sales of new homes dropped for the fourth consecutive month in January in Shanghai as more buyers are taking a wait-and-see attitude after the government stepped in to tackle soaring home prices.

http://www.shanghaidaily.com/sp/article/2008/200802/20080218/article_349027.htm

Government links with developer

SHANGHAI Putuo District Government joined forces with a world leading property services provider yesterday to establish a strategic partnership as part of its efforts to accelerate real estate development in the district.

Under an agreement signed yesterday between the district government and Colliers International, the property developer will serve as an international strategic consultant for the local government and offer all-round property solutions which will include comprehensive development planning, real estate promotions for overseas investors and tenants and professional property management services.

The strategic partnership, probably the first of its kind in the city between a district government and an international property consultancy firm, could be a win-win deal.

"With a successful track record and nearly 20 years' operating experience in the Chinese market, Colliers is expected to help attract more international investors and multinational cooperations to either invest or build their centers here in the district," said Lu Nanting, director of Putuo Investment Service Office. "Moreover, we believe Colliers' extensive network and resources around the globe may also be of great help."

Colliers, which entered the China market early in 1989 and now manages properties in more than 60 cities across the nation, sees Putuo as the most promising district for new CBDs to emerge, aside from the traditional zones.

http://www.shanghaidaily.com/sp/article/2008/200802/20080221/article_349422.htm

Shares to fund projects

CHINA Merchants Property Development Co Ltd, a major publicly listed real estate developer in the country, said yesterday it plans to raise as much as 8 billion yuan (US$1.1 billion) through a new share sale, mainly to fund 14 projects in six mainland cities including land acquisition and property development.

The 14 projects, mainly residential ones as well as some office and industrial developments, will need a total invesment of about 17.1 billion yuan, the Shenzhen-based company said in a filing to the Shenzhen stock exchange yesterday.

Eight of the projects are located in Shenzhen, two in Shanghai and one each in the cities of Tianjin, Chongqing, Suzhou and Zhuhai.

"The new share sale plan will certainly help CMPD further expand its presence in the country's property market," said Xue Hebin, a real estate industry analyst at Orient Securities Co.

"We believe the company, which now develops real estate projects in 12 cities nationwide, will be able to maintain its fast-growing pace in the coming 2008," said Xue.

According to the annual report released by CMPD yesterday, net profit soared 83.38 percent to 1.158 billion yuan last year amid strong sales growth.

Twelve-months sales of residential properties reached 2.628 billion yuan, a year-on-year increase of 81 percent.

In addition, revenues from leasing properties rose 25 percent to 383 million yuan in the report period and gains from brokerage services jumped 71 percent to 103 million yuan, the report said.

China's real estate developers, no matter big or small, are facing stringent capital flows as the country's lenders are all tightening their credit controls to prevent the economy from overheating.

Continuous increases in benchmark lending rates and reserve requirement ratio required by the central bank has made borrowing costs higher and financing more difficult for domestic developers.

In 2007 alone, the People's Bank of China raised its interest rates on lending six times and asked banks on ten occasions to put more money aside to cover lending.

http://www.shanghaidaily.com/sp/article/2008/200802/20080221/article_349420.htm

Hong Kong has most expensive office space in Asia

HONG Kong has overtaken Tokyo with the most expensive office occupancy costs within the Asia Pacific region, or the second-highest in the world, while Shanghai holds 24th place on this year's list being the most expensive location on the Chinese mainland, the latest global report on office occupancy costs by Cushman & Wakefield has found.

According to the 2008 edition of Office Space Across the World released today by the global real estate services provider, London retains its title as having the most expensive office occupancy costs around the globe, with prime space in London's West End now at US$9.32 per square meter per day, a 30 percent increase from a year earlier in local currency terms.

Hong Kong, the new runner-up, has recorded a 40 percent year-on-year increase with prime office rental currently standing at US$7.13 per square meter per day, while in Shanghai, rental for prime office spaces is set at US$2.06 per square meter a day, the report said.

``With the expansion of the financial services sector the demand for office space grew significantly in Hong Kong in 2007 with rental levels advancing by almost 40 percent in the Central (CBD) submarket, and with limited new supply expected for 2008, it is expected that rents will continue to grow," explained Richard Middleton, executive managing director of Cushman & Wakefield's China operation.

``Meanwhile, the Chinese mainland market delivered a more steady performance, compared to Hong Kong, with rents growing an average 5 percent over the year.''

In particular, Beijing saw a significant amount of new supply of Grade A space so that rental growth has been marginal while Shanghai on the other hand has seen an increase of 10 percent in rentals from last year.

``Overall, China should continue to see steady growth in 2008 mainly due to the strong domestic economy and also because of continued improvements in infrastructure such as in the case of Beijing with the upcoming Olympics Games,'' Middleton added.

Overall, the Asia Pacific region recorded exceptional rental growth in 2007 rising an average of 25 percent, a significant increase as compared to the 10 percent growth in 2006. Among the region, Singapore revealed itself to be the fastest regional riser in 2007 with rents increasing by 78 percent in the CBD characterized by high demand and tight supply.

http://www.shanghaidaily.com/sp/article/2008/200802/20080222/article_349646.htm

Hong Kong's office space now dearest in Asia Pacific

HONG Kong has overtaken Tokyo with the most expensive office-occupancy costs within the Asia Pacific region, or the second-highest in the world.

Shanghai holds 24th place on this year's list as the most expensive location on the mainland, the latest global report on office-occupancy costs by Cushman & Wakefield has found.

According to the 2008 edition of "Office Space Across the World" released yesterday by the global real-estate services provider, London retains its title as having the most expensive office-occupancy costs on the planet, with prime space in the city's West End now at US$9.32 per square meter per day, a 30 percent increase from a year earlier in local currency terms.

Hong Kong, the new runner-up, has recorded a 40 percent year-on-year increase with prime office rental standing at US$7.13 per square meter per day, while in Shanghai, rental for prime office spaces is set at US$2.06 per square meter a day, the report said.

"With the expansion of the financial-services sector, the demand for office space grew significantly in Hong Kong in 2007, with rental levels advancing by almost 40 percent in the Central (CBD) submarket, and with limited new supply expected for 2008, it is expected that rents will continue to grow," said Richard Middleton, executive managing director of Cushman & Wakefield's China operation.

"Meanwhile, the Chinese mainland market delivered a more steady performance, compared to Hong Kong, with rents growing an average five percent over the year."

In particular, Beijing saw a significant amount of new supply in Grade A space and, as a consequence, rental growth has been marginal. Shanghai, on the other hand, has seen an increase of 10 percent in rentals from last year.

"Overall, China should continue to see steady growth in 2008 mainly due to the strong domestic economy and also because of continued improvements in infrastructure such as the case in Beijing, with the upcoming Olympics Games,'' Middleton said.

Overall, the Asia Pacific region recorded exceptional rental growth in 2007 rising an average of 25 percent, a significant increase as compared to the 10 percent growth in 2006.

Singapore was the fastest regional riser in 2007, with rents increasing by 78 percent in the CBD, characterized by high demand and tight supply.

http://www.shanghaidaily.com/sp/article/2008/200802/20080223/article_349681.htm

City unveils house plan

ABOUT 20 million square meters of new homes will start construction this year in Shanghai - with a fifth being set aside for budget and low-rent houses, the city government says.

Some 25 million square meters of new houses will be built by the end of the year, with about 20 million square meters available for sales, according to Shanghai's annual housing plan for 2008.

Between eight million and 10 million square meters of land plots for residential use will be launched this year, with at least 20 percent allocated to build budget homes.

An extra 20,000 families will get access to low-rent houses offered by the government this year, according to the plan.

Last week, the city government said budget homes will be reintroduced in Shanghai to meet the needs of medium and low-income families.

Budget homes

Some 300,000 budget apartments, with a total gross floor area of 20 million square meters, will be built in Shanghai over the coming five years. Budget homes will account for 20 percent of the city's total new houses in future.

The city began building budget homes in 1995 but stopped in 1999. That's because new homes - whether budget or not - were sold at similar prices due to similar land costs, industry analysts said.

Other major Chinese cities also released their annual housing plans over the weekend, as required by the central government.

For instance, Beijing will introduce 17 million square meters of home plots this year, with 27.5 million square meters due to start building this year.

In the southern city of Guangzhou, meanwhile, between three million and 4.9 million square meters of land is allocated for building houses, with between 8.5 million and 11.8 million square meters of homes due to be built this year.

http://www.shanghaidaily.com/sp/article/2008/200802/20080205/article_347952.htm

Robust growth set to gain momentum

SHANGHAI'S real estate market ended last year with strong growth in all sectors and the trend is expected to continue this year.

The central government is expected to keep a close eye on the development of the market and introduce new policies to maintain a measure of control.

Strong domestic demand and continued interest from overseas investors, however, will augur well for the city's market, a recently released market research by property experts Savills has found.

Today, we offer detailed explanations of the many positive and negative factors likely to affect the Shanghai real estate industry.

Positive factors for 2008

With high inflation levels likely to persist, real interest rates are expected to remain low or negative for most of this year, encouraging divestment from bank savings into higher return investments such as the property market, especially for those with higher capital reserves.

Shanghai's economic growth is expected to continue. Corporate expansions and a tight labor market for mid management and professional positions are expected to feed into increases in wage packets spurring on retail spending and property acquisitions.

Though not taking a major role in the Beijing Olympics, the knock-on effect of the event is expected to have a significant impact on tourism figures this year, creating strong demand for short-term accommodation and retail. Shanghai will host the preliminary rounds of the football.

The continued appreciation of the yuan against the US dollar is expected to continue as downward pressure on the dollar and upward pressure in terms of trade and inflation on the yuan remains. Analysts predict a revaluation in the range of eight to 10 percent after the 6.5 percent revaluation last year. This adds extra incentive to investors and will keep interest in China strong.

Increasing scarcity of developable land in downtown areas and high land prices and relocation costs will likely curb future supply, putting a strain on existing stock and upward pressure on prices.

The supply-demand imbalance that was present last year is expected to persist in 2008. Developers are unable to satiate demand from the growing wealthy young working class.

Despite government attempts to absorb excess liquidity in the market, rising share prices and property prices in conjunction with growing pay packets have made cash readily available. With limited investment channels, most funds tend to find themselves directed into real estate or stock markets.

Despite increasingly restrictive policies regularly being released to deter foreign funds from investing in China, investors' appetites are expected to remain strong, drawn to China by its miraculous growth story and its many opportunities.

Central and local governments predict strains on China's infrastructure and consequential investment into both inter- and intra-city infrastructure. The demand will help provide a framework for rapid expansion of the economy and real estate markets.

While the slowdown of the American and European economies could lead to an adverse impact on China, the reallocation of investment capital from the West to Asia, where higher returns are achievable, could significantly outweigh any slowdown in the economy.

Negative factors for 2008

Rising inflation concerns will put pressure on the government to continue increases in interest rates possibly resulting in weaker lending and a rising number of mortgage repayment defaults.

With China recording another record in terms of growth last year and with real estate prices continuing to rise, the government has said it would continue to introduce regulations to moderate growth.

The subprime mortgage crisis in the United States and Europe, and its drastic impact on the financial markets, could lead to a slowdown in the economy.

Government initiatives to increase supply of low-cost housing could restrain price rises in the market as a whole.

The continuing rapid appreciation in house prices could lead to social unrest in China.

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Poly nets double its profit on home sales

POLY Real Estate Group Co, China's largest state-owned developer, said yesterday net profit more than doubled last year, mainly due to strong sales of homes in Guangzhou and Beijing.

Earnings jumped 121.77 percent to 1.489 billion yuan (US$206.8 million) during the year ending December 31, the Guangzhou-based property developer told the Shanghai Stock Exchange.

Property sales surged 104 percent to 17.04 billion yuan in 2007 after the company sold 1.996 million square meters of property, an increase of 62 percent compared to 2006.

Earnings per share rose 96.97 percent to 1.30 yuan.

During the year, 4.1 million square meters started construction, 72 percent more than 2006, and the total gross floor area completed reached 1.71 million square meters, a year-on-year increase of 87 percent, the company said.

For 2008, Poly said it will continue to focus on developing homes in major Chinese cities such as Shanghai, Beijing, Guangzhou, Wuhan and Shenyang.

The company also said it plans to start construction on about 6.3 million square meters of property, and complete some 3.5 million square meters this year.

Also yesterday, Shanghai Shimao Co Ltd, a real estate developer owned by billionaire Xu Rongmao, reported a decrease in earnings due to a sales drop.

Net income fell 37.22 percent to 139.8 million yuan last year, it told the Shanghai Stock Exchange.

The company said it plans to further tap the booming commercial property sector in 2008 and speed up development of its existing projects in Kunshan and Nanjing.

http://www.shanghaidaily.com/sp/article/2008/200802/20080206/article_348107.htm