Construction investment surges

PUBLISHED : Monday, 09 July, 2001, 12:00am
UPDATED : Monday, 09 July, 2001, 12:00am

Investment in the mainland property market has dramatically revived, with capital invested in the sector surging 26.5 per cent in the first five months of the year.

Having suffered more than five years of falling prices and chronic over-supply, investment in property projects amounted to 153.5 billion yuan (about HK$144.2 billion), compared with 121.34 billion yuan over the same period last year, according to the State Statistical Bureau.

However, projects involving foreign investment capital dropped 23.3 per cent over the same period to 4.4 billion yuan, the bureau said.

The increase was mainly attributable to growth in the housing sector and retail property investment.

Housing investment rose 30.7 per cent to 105.7 billion yuan, while money invested in retail property grew 38.5 per cent to 16.4 billion yuan, mainland Web site quoted the bureau as saying.

Investments in office property dropped 4.3 per cent to 8.1 billion, and analysts predicted the fall was likely due to investors' concerns over a large supply over-hang.

Pushing the development of the property industry is high on the agenda set by political leaders in the next decade.

In the 10th five-year plan delivered during the National People's Congress in March, the property sector, especially housing construction, is seen as a prime driver of mainland economic growth.

About 170 billion yuan will go into housing this year to help middle- and low-income families become homeowners, said.

Beijing has targeted gross domestic product growth of 7 per cent a year, on average, for the next five years.

Analysts said a healthy economy, on the other hand, would fuel property development as the two were closely linked.

International companies, including Hong Kong and Asian enterprises, rushed to develop mainland real estate projects in the early 1990s.

A few years later investment sentiment dropped, with the market suffering an over-supply in a slow economy.

But analysts said international investors have shown signs of coming back as the mainland's economy continued to improve.

In terms of property sales, the bureau said total area sold in the first five months amounted to 37.95 million square metres, up 28.3 per cent.

Commodity properties, which were sold based on market values, amounted to 89.9 billion yuan, of which about 85.7 per cent came from individual buyers.

Properties sold to individuals rose 47.4 per cent to 77.1 billion yuan, the bureau said.