Chinese developer CIFI to stay focused on Shanghai
CIFI Holdings (Group), a Shanghai-based property developer that has grown rapidly in recent years, sees great potential in the city and plans to continue with its focus on China’s financial capital.
Shanghai introduced the toughest curbs on homebuyers in March, choking off sales and triggering concerns about prices coming crashing down in the city.
“Transactions have declined, price growth has slowed, but prices will still go up. We are positive about the Shanghai market in the long run,” said CIFI chairman Lin Zhong. “The market is still pretty healthy as the proportion of speculative buyers is low.”
In the year to March, prices of new homes in Shanghai had risen 30 per cent, the fastest growth ever tracked by the National Bureau of Statistics.
To rein in prices, the government has stipulated that the city’s non-local residents must pay social insurance or taxes in Shanghai for at least five years before they can purchase property, rather than the two years stipulated before.
Lin is not worried about the impact from the new policy, saying demand from locals remains buoyant. According to Lin, Shanghai’s average living space per person is relatively low compared with the national average, which is only around 20 square metres.
“There is demand from upgraders, newly married couples and those who are relocating as old builds are demolished,” Lin said, adding that the trend of population inflows into Shanghai will continue and prop up the home prices in the city.
“The market is huge. The transaction volume in Shanghai has already exceeded that of Hong Kong.”
In the first quarter, CIFI’s contracted sales nearly tripled from the same period a year ago to 11 billion yuan, to which, Shanghai and its satellite city of Suzhou, contributed most.
Lin said he expects CIFI’s sales in Shanghai this year to surpass that of last year. The developer plans to slow down land purchases this year all the same, after rapid expansion last year, given the current high prices of land.
Established in 2000, CIFI has expanded into 16 Chinese cities and had a land bank of approximately 12.5 million square metres as of last year, of which 95 per cent was in first- and second- tier cities.
With the central government trying to prop up the vital property sector, home price recovery has spread from first-tier cities to the second-tier ones such as Suzhou and Nanjing in the past few months.
Lin said he believes property markets in Wuhan, the capital of Hubei province, and the northern coastal city Tianjin, will heat up soon, going by the trend.
Instead of expanding into new cities, Lin said his company would concentrate in the cities where it already has a presence, with a strong focus on Shanghai, to better manage risks.
The developer was ranked 21st in the nation last year in terms of contracted sales.