China’s second-tier cities next in line for property boom, says Shanghai developer CIFI

China’s housing boom is shifting from its biggest cities such as Beijing and Shanghai to provincial capitals, said Shanghai property developer CIFI holdings after the company posted a 28 per cent growth in 2016 full year net core profit.

First-tier cities are gradually transforming into markets dominated by leasing activities from developing and selling because property prices are already too high and new land supply is very limited, Lin Zhong, CIFI’s chairman, said during an annual results briefing in Hong Kong.

“So second-tier cities, which have just began to feel the heat, will usher in the peak season of home construction and sales and we’re bullish on that,” Lin said.

The homebuilder has shifted it strategic focus from first-tier to second-tier cities and aims to make a foray into a number of smaller cities this year including Shi Jiazhuang in Hebei province, Chengdu in Sichuan province and Nanchang in Jiangxi province, as well as to enhance its presence in Guangdong province.

He added that some of the second-tier cites may see new home prices double over the next three to five years.

CIFI’s net core profit, excluding property revaluations and foreign-exchange losses, rose to 2.82 billion yuan (US$408 million) from 2.2 billion yuan a year earlier.