Greenland dismisses China housing pessimism as 'overdone'

PUBLISHED : Monday, 22 September, 2014, 4:28am
UPDATED : Monday, 22 September, 2014, 4:28am

The Hong Kong-listed unit of the mainland's No 2 developer Greenland Group sees plenty of opportunities in the mainland market, dismissing as overdone concerns following a report that home price falls spread to a record number of cities last month.

Chen Jun, chairman and chief executive of Greenland Hong Kong, predicts that the correction in the property market will be temporary, saying demand will ensure healthy growth in the industry over the long term.

"The old days when developers could pocket easy money in a buoyant market are gone," he told the South China Morning Post. "However, the pessimism was overdone and we are still highly hopeful that pent-up demand in some of the regions will offer good opportunities to us."

Greenland Hong Kong would earmark up to 10 billion yuan (HK$12.6 billion) annually to boost its land bank on the mainland in the coming years.

The developer's upbeat mood is in contrast to fears expressed for the industry after 68 of 70 big mainland cities witnessed home price falls in August.

The government figures from the National Bureau of Statistics exacerbated bearish sentiment in the real estate industry, a key pillar of the mainland economy, with some corporate officials and analysts forecasting a collapse of the once bubbly market.

Developers including China Vanke, the mainland's biggest residential developer, have offered discounts to homebuyers to reduce inventories.

A clouded economic outlook, heightened expectations of further discounts and fears over an upcoming property tax have kept homebuyers at bay, increasing pressure on developers to keep their businesses afloat. More than 30 local governments have eased home purchase restrictions this year to underpin the weak property sector.

"We'll adjust our strategy in line with the market conditions but price cuts will be made at a reasonable level," said Chen, also an executive vice-president of Greenland Group. "We believe a downturn over the short term is acceptable."

Greenland Hong Kong expects to achieve sales of 12 billion yuan this year based on a rosy performance for the eight months to August, when the company sold properties worth more than eight billion yuan.

It will focus on cities with less competition, including Kunming, capital of Yunnan province, and Nanning, capital of the Guangxi autonomous region.

Nomura Securities estimated that an average 10 per cent discount on newly built flats will be offered to buyers in the coming months, but it ruled out a hard landing due to people's strong desire for improved housing.

"In the next three to four years, the property market will still grow at an orderly pace," said Gao Jianfeng, head of China property research at Nomura.