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China's property investment growth hits 5-year high driven by smaller cities

Infra News - Published on Mon, 18 Mar 2019

Image Source: Reuters UK
Reuters reported that China’s property investment accelerated in the first two months of the year driven by strong demand in its hinterland and defying a decline in sales, government curbs in bigger markets and a broader economic slowdown. Real estate investment, which mainly focuses on the residential sector but also includes commercial and office space, is a key driver of growth for the world’s second-largest economy. It rose 11.6 percent in January-February from a year earlier, up from the 9.5 percent growth reported for the 2018 full year, data from National Bureau of Statistics showed.

That marks the strongest growth for the January-February period since 2014, when it rose 19.3 percent.

The NBS said robust investment in the property sector was due to steady housing prices and an increase in property construction.

Yang Yewei, a Beijing-based analyst with Southwest Securities, said that “China’s real estate market continues to show strong resilience.”

Developers said that market sentiment has improved recently thanks to looser credit policies. Beijing has also become less worried about cities easing existing curbs and is more concerned about the broader economic impact of the trade war with the United States.

A senior executive from a top Chinese developer, who declined to be named because he is not authorised to speak to media “The market has obviously become better this month. The surge in investment is because many developers began construction on land to replenish their inventory as housing stock has kept falling,” adding many tier-2 cities are running on merely three to four months of inventory.

Yang added that but the cooling trend in sales suggests that such a rebound will be difficult to maintain while the real estate market still faces relatively significant downward pressure, Southwest Securities’.

Housing transactions slowed as property sales by floor area fell 3.6 percent YoY in the first two months of 2019, easing from the 0.9 percent gain in December.

New construction starts measured by floor area were also much weaker, rising 6 percent in January-February from a year earlier compared with the 20.5 percent in December, according to Reuters calculations.

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Posted By : Rabi Wangkhem on Mon, 18 Mar 2019
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