China state-backed developers pouring money into Guangzhou
Waning fortunes of city's five biggest private developers give state-owned firms the chance to muscle in on property market
China's state-backed developers are making unprecedented investments in Guangzhou, as the private firms that have dominated the wealthy southern city for decades grapple with tight liquidity and Beijing's corruption crackdown.
"We expect there will be more opportunities in Guangzhou because of a fairer environment under a change of political landscape," state-owned China Resources Land's chief financial officer Yu Jian told analysts last month.
The so-called tigers - Agile Property, Evergrande Real Estate Group, Country Garden Holdings, Guangzhou R&F Properties and KWG Property - would no longer dominate the city, Yu said. Guangzhou's allure lies in its higher margins and stability. The average selling price per square metre in Guangzhou from January to June was almost twice as high as the national average recorded by Country Garden and Guangzhou R&F, according to company statements.
The capital of Guangdong province is also considered better positioned to withstand any housing correction because of its vast reservoir of demand, making it increasingly attractive to developers hit by a sharp downturn in the Chinese property market. But until recently, state-owned firms have avoided taking on Guangzhou's established players on their home turf.
Those days are over. On November 10, for example, state-backed Longfor Properties entered the city of over 13 million people for the first time, buying two sites at auction for 3.78 billion yuan (HK$4.77 billion).