Bricks and Mortar

BNP report pinpoints mainland's healthiest property markets

Study ranking the mainland's good, bad and least attractive cities reveals southern comforts

PUBLISHED : Monday, 25 August, 2014, 11:32am
UPDATED : Monday, 25 August, 2014, 11:59pm

Whether you're an institutional or individual investor, picking one out of more than 600 mainland cities to park your capital in is never an easy way to hunt treasure.

A recent study by BNP Paribas that analysed the housing market across the mainland's top 100 cities may provide a guide for those interested in betting on home prices soaring again after the loosening of restrictions on home purchases.

The 100 cities in the study recorded total transaction volume of 660 million square metres last year, representing 57 per cent of total mainland transaction volume of 1.16 billion square metres.

The results of the study, included in a report titled "In search of growth in China's top 100 cities" by Lee Wee Liat, BNP Paribas' Hong Kong-based head of Asia property research, indicated that 57 of the cities, from Sanya, Hainan, in the south to Harbin, Heilongjiang, in the north, had unhealthy supply-demand dynamics - facing either oversupply or demand conditions that were likely to deteriorate.

It drew up a list of "good" versus "bad" cities based on five indicators: the number of years of land oversupply, number of years of housing units undersold or oversold, degree of housing imbalance, population/floor space square metre sold and total population to hukou (registered) population ratio.

In that contest, Shenzhen outperformed the other 99 cities to be crowned healthiest city.

Shenzhen's land reserves have been in undersupply for 7.4 years and its housing in undersupply for 6.74 years, while the city is also the most attractive in terms of net inward migration, something bound to create future housing demand

Other good cities were Beijing, Xiamen, Guangzhou, Shanghai, Hefei, Dongguan and Chengdu.

Yantai, the city least attractive to migrants, was at the bottom of the list, with land supply sufficient for 9.25 years of development and a housing stockpile that will take 10.94 years to digest.

Now that we know the "good" and "bad cities", which developers have the best land banks?

BNP's study indicated the Pearl River Delta region has more "good" cities, followed by Central and Western China, the Yangtze River Delta and Northern China.

The study concluded that China Vanke is better positioned than China Overseas Land and Investment because of its bigger exposure to the Pearl River Delta and Western and Central China.