China housing slump sparks fears for economy

[BlueKelah]

BEIJING (AP) -- Six months ago, China's housing market was so red-hot that Feng Xiaowei, a sales manager at a real estate agency in the eastern city of Hangzhou, rarely took a day off.

Then lending and sales curbs imposed by the government to cool soaring housing costs started to bite and business evaporated. Now Feng and the seven salespeople he supervises spend the day playing cards.

Read more....

[Boon]

Crisis or Opportunity ?
________________________________________________________________________________________________________________
China Property Downturn Offers Good Investment, CBRE Global Says

By Bloomberg News June 09, 2014

CBRE Global Investors, with $90 billion of real estate assets, raised $470 million to invest in China’s property market amid a slowdown.

CBRE Global will invest primarily in retail and residential mixed projects, Greater China Country Manager Richard van den Berg said in an interview in Shanghai yesterday. The amount was the biggest the Los Angeles-based company has raised in Asia in almost a decade, he said.

After four years of government restrictions to cool the housing market, home sales and property construction are sliding and have become a drag on the economy, which expanded at the slowest pace in six quarters in the first three months of the year. CBRE Global hasn’t made any real estate investments in the world’s second-largest economy for the past five years, said van den Berg.

“These corrections will continue for another six months to maybe a year, therefore the entry point now is good,” he said. “We are not foreseeing a huge correction, but sufficient enough for us to take advantage for this period of time to re-enter the market.”

CBRE Global plans to invest the newly raised capital in nine deals over two years, van den Berg said. The majority of the investments will be in China’s less-affluent second-tier cities and satellite towns around Beijing and Shanghai, he said, declining to elaborate on how the the capital is structured because of regulation requirements.

Falling Prices

Not everyone is as optimistic as van den Berg. Moody’s Investors Service revised its credit outlook for Chinese developers to negative from stable last month. Yu Liang, president of China Vanke Co., the nation’s biggest developer, said in May the “golden era” of property is over.

Home prices fell for the first time on a monthly basis in May, according to SouFun Holdings Ltd., China’s biggest real estate website owner.

China home prices will fall 5 percent this year as developers cut prices to meet sales targets amid a cooling market, Standard & Poor’s said yesterday.

CBRE Global isn’t alone in seeing the recent slowdown as an opportunity to invest. Forum Partners, a global real estate investment firm managing $6 billion of assets, said in March that it is looking to invest in more developers in China as it bets on a recovery in the market within two years.

“We don’t see a sizable distressed market erupting in China in the foreseeable future,” van den Berg said, adding that CBRE Global “may get access to good assets, land or buildings owned by distressed companies and then with our partners continue to development.”

http://www.businessweek.com/news/2014-06...lobal-says

________________________________________________________________________________________________________________

Forum Partners Seeks to Fund Chinese Developers Amid Rout

By Michelle Yun Apr 9, 2014 11:12 AM GMT+0800

Forum Partners, a global real estate investment firm managing $6 billion of assets, is looking to invest in more developers in China as it bets on a recovery in the market within two years.

“I’d be surprised if we were sitting here in two years having the same conversation around why China is underloved by international investors,” Chief Executive Officer Russell Platt said in an interview yesterday in Hong Kong. There are more opportunities now as there’s less financing available to developers, he said.

Forum is shifting the focus of its Asia fund away from Japan to China, increasing the weighting of the latter to more than 60 percent this year, at a time when Chinese developers face a slowing housing market and a pullback in credit. China’s home-price growth slowed for a third month in March as the central government allowed cities to impose their own property curbs to target local market conditions.

Builders will probably face more challenges this year due to an oversupply of housing in the smaller third-tier cities, a Bloomberg News survey shows.

“In the last six months, we’ve found local developers far more interested to talk to someone like us,” Platt said. “Our capital may not be as cheap as the local banks or the high-yield market during the best times, but we’re offering money for a three to seven-year time period.”

Finding Partners

Forum, which is based in London and manages capital from Western pension funds and insurance companies, is closing an investment soon in a residential developer in a major coastal city, he said, declining to specify which one and identify the developer. It also invested in a developer of warehouses in the eastern Chinese cities of Shanghai, Suzhou and Wuxi earlier this year, and plans to sign at least one or two more deals, Platt said.

“We want to find some of those good, mid-sized developers and owners who want to partner with a firm like ours,” Platt said. The firm invests mainly by offering capital to private businesses in structured deals such as preferred equity or participating debt.

Home prices last month rose 10.04 percent from a year earlier, according to SouFun Holdings Ltd., China’s biggest real estate website. In the Bloomberg News survey, 38 percent of respondents said prices will rise 5 percent to 10 percent this year, while 35 percent said they expected little change.

Default last month by Zhejiang Xingrun Real Estate Co., a regional developer near Shanghai, spurred concerns that more local builders may face insolvency. China has almost 90,000 small developers nationwide, according to data from the National Bureau of Statistics.

Forum’s Platt sees a narrow window for making investments before China starts to relax its monetary policies.

“There’s no incentive to undermine commercial stability nor is the market we think at a Lehman-style tipping point,” he said. “Once policy makers begin to loosen restrictions on lending into property, once they start to pump more money in, developers won’t need us anymore.”

http://www.bloomberg.com/news/2014-04-09...-rout.html

[BlueKelah]

I would say this will lead to a banking crisis.

For a market at peak and where everything is only about property and everyone is talking about property and where ballooning debt is not serviced by rent, I would think the only way is down down down...

Those thinking is an opportunity are just kidding themselves. Historical example in europe and USA are there for all to see. China following same pattern, only they are later in the game.

[CityFarmer]

I would say this will lead to a banking crisis.

For a market at peak and where everything is only about property and everyone is talking about property and where ballooning debt is not serviced by rent, I would think the only way is down down down...

Those thinking is an opportunity are just kidding themselves. Historical example in europe and USA are there for all to see. China following same pattern, only they are later in the game.

How about when almost everyone is talking about the "doom" of property, and banking? I am not sure exactly when it started, since 2009?

[Stocker]

Isn't it good time to consider entering the market when the pessimism reach or near the peak ?

[BlueKelah]

don't think you can use pessimism or optimism to gauge the timing for investment this time round as markets are mainly controlled by big funds and the central bank policies.

I would say it depends on what US fed wants to do really. Reign in their debt or stimulus more. Technically speaking they can continue increasing their debt with another QE4.

For China, it is already a little too late, their debt to GDP is already 200%++ and I think the government there knows this is gonna be very dangerous, hence the clamp down since end of last year. They are also starting to sell off their US treasuries for some reason.

For SGX, you will notice the STI is going nowhere. Retail investors are mostly sitting on the sidelines and trading volume is really thin and getting less and less. When trading volume gets low, it usually either means a big up or down is in the horizon, but with global economy struggling and singaporean exports shrinking for now we could be in for a very long time of sideways market.

Well its football time anyways so I dun really care and SGX is also at the moment not looking pessimistic or optimistic, more like "whatever"

[CityFarmer]

don't think you can use pessimism or optimism to gauge the timing for investment this time round as markets are mainly controlled by big funds and the central bank policies.

I would say it depends on what US fed wants to do really. Reign in their debt or stimulus more. Technically speaking they can continue increasing their debt with another QE4.

For China, it is already a little too late, their debt to GDP is already 200%++ and I think the government there knows this is gonna be very dangerous, hence the clamp down since end of last year. They are also starting to sell off their US treasuries for some reason.

For SGX, you will notice the STI is going nowhere. Retail investors are mostly sitting on the sidelines and trading volume is really thin and getting less and less. When trading volume gets low, it usually either means a big up or down is in the horizon, but with global economy struggling and singaporean exports shrinking for now we could be in for a very long time of sideways market.

Well its football time anyways so I dun really care and SGX is also at the moment not looking pessimistic or optimistic, more like "whatever"

I concur with all observations, but may be not the conclusions.

I concur with the observation that China gov is doing something for the debt. Well, doing something (right) will reduce risk. It is much less risky than ignoring it and doing nothing.

I concur on the SGX is a sideways market, with low trading volume. Retail investors are sitting on the sidelines. Does it mean the bottom, or near the bottom for SGX? I am betting on SGX, the odds of up is much more than down.

[chialc88]

It's definitely football time.
Early July will be more fun.

For now, I am only buying blue chip as I see the charging BLUE.

Don't believe?

Just check the share price of the Blue Chips and you will see the trend.

LC


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