Beijing North expects price bottom in 2010
Beijing North Star chairman He Jiangchun expects the mainland property market to remain depressed until the second half of 2010 as the global financial crisis has yet to bottom out.
Property sales in many mainland cities increased significantly in the last two months, but Mr He said the active transactions were not sustainable.
He said property prices would continue to drop, with prices in first-tier cities sliding faster than in second-tier cities.
But Mr He did not expect property prices to drop sharply.
'We expect the downturn in the mainland economy to last for three years. The latest financial crisis will have a considerable impact on the mainland and the economy has yet to bottom out,' he said.
Mr He said property prices may bottom out towards the end of the year, but more likely it would be in the second half of next year.
The property arm of the Beijing municipal government aims for contracted sales revenue of 2.9 billion yuan (HK$3.29 billion) this year, about 33 per cent less than the 4.31 billion yuan achieved last year.
Floor space available for sale dropped 45 per cent to 450,000 square metres this year.
Despite the dim outlook for sales revenue, Mr He said the company was expected to book sales of 220,000 sq m this year, similar to last year's figure. 'We generated 4.3 billion yuan from contracted sales of 380,000 sq m in the last few years and have not booked it,' he said.
Beijing North Star has generated 550 million yuan from sales at three residential projects so far this year. Its gearing ratio was 62 per cent as of the end of last year.
The company would continue to be cautious on land acquisitions and would not acquire new developments until the end of this year, he said. 'We will look for small development sites only that will not affect our cash flow,' Mr He said.
Beijing North Star shares jumped 4.84 per cent to HK$1.3 yesterday.
