China’s real estate market has hit bottom in short term, but recovery to be moderate and slow – Vanke chairman

 

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From a short-term perspective, China’s real estate market has hit the bottom, but the recovery will be a moderate and slow process, said Yu Liang, chairman of property developer China Vanke.

“The market has contracted excessively, but that has actually helped accumulate the momentum for a self-recovery, said Yu.

Property sales in July and August did weaken significantly from June due to a rapid recovery in June and a wide-spread mortgage boycott which dampened potential home buyers’ confidence, he said.

China’s rigid housing demand remains strong and the real estate sector is still a 10 trillion yuan-level market, he noted.

Currently, China’s real estate market will see 1 – 1.1 billion square meters of homes turn obsolete per year, in which 300 million square meters in tier-one and tier-two cities, but newly-built residential properties fall short of the obsolete volume, and the figures don’t even take account into the demand for housing improvement etc, he added. “The market is currently at an excessively low level and it won’t remain at this level for long.”

China Vanke reported a 10.6% rise in first-half net profit to 12.22 billion yuan but declared no cash dividend and no bonus shares for the first half.

Vanke’s revenue climbed 23.8% from a year earlier to 206.92 billion yuan. Of that, the property development business earned 23.9% more from a year ago to 178.88 billion yuan, while its property management services cashed in 12.19 billion yuan, jumping 42.2% from one year ago.

However, Vanke’s sales dropped 39.3% to 215.29 billion yuan while the sold floor area slumped 41.1% to 12.91 million square meters.