Rebound confirmed in real estate

Analysts are closely monitoring developments in the real estate and automotive sectors, which can pull the Chinese economy upwards. The latest studies published confirm once again the net rebound in real estate activity, even if the treasuries are in need of bailouts.

Transactions take off in the resale residential market
The volume of real estate transactions to grow during the May 1st holidays (May 1 to May 5). According to a study by the Securities Journal – 证劵时报, in 18 major cities, transactions were 60% higher than in the same period last year (which admittedly lasted only 4 days). 14 of these cities recorded an increase, Beijing had the highest, 100% with 900 sales, and Hangzhou was stagnant. The biggest drop out of 4 is in … Wuhan with -13%.

Real estate in China

More purchases for developers
On the new-build side, land bought by the 50 largest developers rose by 7.2% in April over April 2019 and by 108.9% over March 2020.

Lower prices among developers
70% of developers have lowered their prices, down to -24%. The Evergrande, 恒大集团, group from Shenzhen, listed on the Hong Kong stock exchange, lowered its prices by 16%; at the same time, the area of homes sold rose by 19% and the amount of sales by 45%. On the surface, the developers are making large profits; in fact, they are forced to lower their margins to speed up cash flow because they are under pressure from their debts. Those far from the eastern side of more prosperous China are struggling; the recovery has taken longer in the centre of China, especially in the third- and fourth-tier cities. Inventories are high, debt is peaking and financing is complicated.

These indications confirm a good recovery, with a catch-up effect. The first quarter of the year, punctuated by the epidemic, has put cash flow in difficulty, forcing developers to lower their prices to bring in cash. This policy of low prices should stop as soon as the cash inflows allow the financial departments to breathe easier!

At the request of readers, we will be introducing new Chinese vocabulary in the future :
拿地, ná dì: literally take land. In fact, it is buying the right to exploit and use a piece of land. It is translated as “To buy land”. 

Article consulted :  楼市5月份开启“降价潮”,房价要跌?70%房企已行动,降幅达16% 

14 May2020

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