Number of Chinese property developers seen shrinking drastically in the next 5 years
UBS sees only single-digit thousands or even hundreds of the currently around 30,000 property firms surviving as the country’s property market cools
The number of property developers in China could fall from around 30,000 to only the single-digit thousands or even hundreds in the next five years as the country’s red-hot market cools, according to Swiss bank UBS Group.
A series of government policies to contain property prices in recent years has started to have an effect, with all key property statistics, including sales, prices and land supply in cities showing a slowdown since June, Hu Yifan, chief China economist at UBS, told a media briefing on Wednesday.
“There will be a relatively large consolidation in China’s property sector in the next three to five years,” Hu said. “Chinese developers would be gradually consolidated down into thousands, or even only hundreds, as the industry undergoes drastic change.”
“In September, we saw a turning point in the sector as sales growth was negative for the first time in a long time,” she said.
China’s housing boom started with privatisation in 1998, which ended the distribution of state-owned housing and paved the way for a privately owned residential market. Since 2010, however, authorities across the country have sought to cool prices through measures including restrictions on second-home purchases, raising minimum down payments and tightening mortgage lending.