Guangzhou cuts unsold homes inventory, but commercial property levels remain high
City has 8.4 months worth of excess domestic space, and 16 months worth of commercial oversupply
Guangzhou, China’s fourth largest city, has seen its housing inventory reduced to 8.4 months worth of sales, amid a nationwide effort to clear unsold properties, but a significant oversupply remains of commercial properties.
The amount of available new home space dropped 960,000 square metres in the first half to 21.52 million square metres at the end of June, representing 8.4 months worth of sales, Guangzhou mayor Wen Guohui said on Wednesday.
An inventory below 12 months worth, marks what the industry considers a good balance between supply and demand.
Wen highlighted the city government has banned speculative activities including down payment loans and buying houses through crowd funding, to stabilise the local market.
But the city still needs to cut 450,000 square metres of housing stock, he said.
The provincial capital of Guangdong’s commercial property inventory, meanwhile, dropped by 2.9 months worth in the six months, but is still as high as 16 months.
Most of the excess office building and shopping centre space is in Panyu district, on the outskirts of Guangzhou.
“The city has sold too many commercial-use plots in the past few years, the government should have a better plan,” said Han Shitong, deputy director of the Guangdong Real Estate Industrial Research Association.
The slowing economy and impact from online shopping have dampened the local retail sector, Han said, and some existing department stores can’t even receive rent from tenants.
But the developers are still building new shopping malls as a part of stringent development requirements when buying land, said the official.
To response to the oversupply, the mayor said the government was encouraging developers to change their planned use of empty commercial sites, as a way of clearing the backlog.
But Han said it should take the lead and send experts to those projects to help developers make the best decision, whether to change their buildings to apartments, or other uses.
Guangzhou, a traditional trading centre in China, has been losing its edge in recent years as its rivals Shenzhen and Hong Kong have risen to become regional exhibition centres.
Han said Guangzhou must reinforce its position as a national trading centre, through organising high-level international exhibitions and that’s also the way out for local consumption.
“More support from the central government is also needed. Shanghai held World Expo, Beijing held the Olympics, what is there for Guangzhou?” he said.