Anxieties loom for both Chinese developers and investors

While there is a clear divergence in views between upbeat mainland developers and the more conservative real estate investors, they do share anxiety about policy volatility and foresee increased possibility of market consolidation, a recent sentiment survey by global property consultancy DTZ showed.

The survey also found that Chinese developers are less interested in domestic geographical expansion, but keen to explore overseas markets such as the United States, Canada, Australia, Malaysia and the UK.

"Developers will become less aggressive in replenishing their land banks, leading to a fall in land purchasing activity within the next 12 months," DTZ said.

The survey, which included banks and lenders, showed all participants expect mainland property sales volumes to increase and home prices to climb this year, with all eyeing an increase in capital deployment in the real estate sector.

Investors in China's real estate market - with respondents to the survey comprising largely overseas institutions and private equity funds - are worried that fundraising will become more difficult for Chinese developers this year, although costs will not necessarily rise, with developers and their banks shrugging off such concerns, the survey found.

All three categories of respondents were quite negative about the projected impact of a continued roll-out of the real estate tax, but developers were the most negative.

"However, while an expedited roll-out of a national real estate tax emerged as an ongoing source of anxiety to the survey's respondents, it is unlikely to be accomplished quickly," DTZ said, since the wider imposition of the tax is unpopular with local governments who are unsure of their ability to collect the new levy and also unclear about what proportion they can retain.