China Real Estate Industry Report, 2007-2008
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Between January and August of 2007, China real estate development investment reached RMB 1.42 trillion, up 29%. Its growth rate was up 5 percentage points YoY, 2.3 percentage points higher than that of urban investment at the same period. The real estate investment occupied 20.4% of the urban investment, up 0.4 percentage points YoY. The growth of the housing investment began to speed up and the ratios of common commercial residential building and affordable housing increased. The completed investment in residential buildings in 2007 is up 30.9% YOY, up by 1.9 percentage points compared to the growth of the real estate investment at the same period, of which, the completed investment in the apartments of below 90 square meters occupied 20.8% of the total, up 1.3 percentage points over the first half of 2007, and the completed investment in affordable housing occupied 4.4% of the total, up 0.2 percentage points over the first half of 2007.

 

The structure of housing supply begins to improve, but the proportion of the apartments below 90 square meters is still relatively low. Statistics from 40 key cities show that the supply of the common commercial residential apartments below 90 square meters is rising month by month among newly-approved and newly-built residential buildings in those cities. As for the supply of approved pre-sale commercial residential buildings, the proportion of the apartments below 90 square meters (includes 90 square meters) increased from 34.39% in 2006 to 39.05% in Jan.-Aug. of 2007 and its area ratio increased from 21.16% to 24.37% at the same time, but it is still far away from the government goal. The average floor area of each approved pre-sale commercial residential apartment dropped from 122.3 square meters in July of 2007 to 106.95 square meters between January and August of 2007, but the average floor area per commercial residential apartment available in the market up to the end of each month is still as big as 114.03 square meters.  

 

The national completed area of commercial buildings was 208,346,500 square meters in August of 2007, up 10.1 percent YOY, of which, 1212.94 square meters cannot be sold, sharing 5.82%, the completed area of residential building was 170,453,900 square meters, up 10% year on year and occupying 81.81% of that of the commercial buildings, the completed area of office buildings was 4,609,800 square meters, up 3.9% year on year, and the completed area of business buildings was 22,420,100 square meters, up 9.5% year on year.

 

 

Construction of Commercial Buildings in China, Jan.-Aug. 2007

 

 

 

Accumulation (1 million square meters)

YOY growth (%)

Construction area

Newly-built area

Completed area

Including: unavailable area

Construction area

Newly-built area

Completed area

Aug-2006

1551.22

487.41

189.19

12.1

18.5

16.8

8.4

Sep-2006

1632.74

548.85

220.15

14.3

18.9

18

8.7

Oct-2006

1698.41

598.48

257.9

16.5

18.8

18.1

8.5

Nov-2006

1761.7

650.48

304.72

19.7

18.4

18

8.8

Dec-2006

1940.9

781.31

530.19

36.5

17.1

15.1

-0.6

Feb-2007

942.1

99.67

33.3

2.3

17.4

3.6

-1.1

Mar-2007

1243.77

190.44

61.9

3.6

20.7

10.6

9.5

Apr-07

1426.16

273.82

87.1

4.98

21.3

14.7

10.4

May-2007

1567.4

355.1

111.97

6.49

21.9

17.4

11.6

Jun-2007

1713.76

448.92

148.71

8.51

21.9

18.4

11.1

Jul-2007

1819.38

525.58

179.39

10.18

22.5

20.6

10

Aug-2007

1903.02

592.72

208.35

12.13

22.7

21.6

10.1

 

 

Under the background of stricter regulation and frequent interest rate increase, the industrial shuffling will be accelerated. The Matthew Effect will appear in the market, that is, the strong will become stronger. So the key real estate companies will see high growth of market performance as well as market share. The real estate companies with multiple financing channels will show advantage in the competition. They speed up acquiring land resources and rapidly expand the market share. Such advantage has been reflected by leading real estate companies more obviously.

 

Since 2007, many real estate companies have been issuing more stocks or carrying out backdoor listing, creating effective financing means vigorously. Thanks to the capital, the internal integration of the industry is accelerating and the competition in the land market is increasingly fiercer. With the increase of the industry entry barriers, the cases of merger and reorganization are increasing gradually.

 

In 2007, a series of regulation policy targeting the financial and real estate market have been issued, which shows definite policy inclination for the development of China real estate market, especially the housing market, in 2008 and the future. After 2008, it is believed that, due to the implementation of the strict policy, the available land and residential buildings in the market would increase and the real estate market will be evenly divided into three parts, including new commercial building, housing stock and policy housing. This change in the structure will be favorable for the forming of tiered consumption.

 

In 2008, a series of regulation measures will be further implemented like increasing the land transfer area, accelerating the land supply and preventing the developer from hoarding land and dealing with the unused land and increasing sharply the supply of cheap housing, etc. By then the tight housing supply will be eased to some extent.

 

On the other side, there are still strict restrictions on the surging of land supply. Firstly, the transferred land area will be under control for a long term. The cultivated land area of at least 1.8 billion should be guaranteed. That means the policy that strictly controls the transferred land areas would be maintained for a long term. Secondly, it will be more and more difficult to expropriate land, so the difficulty of land supply would increase accordingly. Once the "Property Rights Law" is implemented, the cycle for building demolition and land expropriation will be prolonged, which will definitely increase the difficulty of the land supply. Thirdly, it is very necessary for enterprises to exploit ample land resource for survival and development. Such situation cannot be changed in a short period. As for the real estate development enterprises, especially the listed real estate companies, the land reserve is one of the key factors to estimate the investment value. Therefore, the land reserve has an internal driving force, which can curb the land transfer.

 

Regarding China real estate industry in 2008, the prospect of the market of commercial residential building is bright. However, under the background of the prosperous real estate industry, the housing problems of the common residents are more serious. In a word, the future of China real estate market is brilliant but the housing conditions of the common people are still tough. 

1 Analysis of National Real Estate Market Operation, 2007
1.1 Influence of some related industrial policy to real estate market
1.1.1 Land policy
1.1.2 Government's complete policy on indemnificatory housing
1.1.3 Second-apartment down payment
1.2 Analysis of national real estate market operation
1.2.1 National housing index
1.2.2 Development and investment of real estate industry
1.2.3 Structure of commercial housing
1.2.4 Supply and demand of commercial housing
1.3 Analysis of commercial housing price
1.3.1 Newly-built commercial housing
1.3.2 Second-hand apartment
1.3.3 Non-residential commercial housing
1.3.4 Economically affordable housing
1.3.5 Major cities

2 Comparison of Real Estate Market of Major Cities, 2007
2.1 Beijing real estate operation
2.1.1 Development and investment of real estate 
2.1.2 Plan for land supply, 2007
2.1.3 Construction of commercial housing
2.1.4 Sale of commercial housing
2.1.5 Economically affordable housing
2.1.6 Commercial housing price
2.2 Analysis of Shanghai real estate market operation
2.2.1 Development and investment of real estate
2.2.2 Supply of commercial housing
2.2.3 Sale of commercial housing
2.2.4 Second-hand apartment market
2.3 Analysis of Guangzhou real estate market operation
2.3.1 Purchase and development of land
2.3.2 Sale of commercial housing
2.3.3 Commercial housing price
2.3.4 Second-hand apartment
2.4 Analysis of Shenzhen real estate market operation
2.4.1 Sale of commercial housing
2.4.2 Commercial housing price
2.4.3 Second-hand apartment price

3 Analysis of Real Estate Segmented Markets
3.1 Analysis of residential housing market
3.1.1 Investment
3.1.2 Construction
3.1.3 Sale
3.2 Analysis of office building market
3.2.1 Investment
3.2.2 Construction
3.2.3 Sale
3.3 Analysis of business building market
3.3.1 Investment
3.3.2 Construction
3.3.3 Sale

4 Analysis of Industrial Chain
4.1 Industrial chain
4.1.1 Complete industrial chains
4.1.2 Enterprise composition
4.2 Analysis of architectural market
4.2.1 Industrial production value
4.2.2 Industrial loan
4.2.3 Investment opportunities
4.3 Analysis of building material market
4.3.1 Operation
4.3.2 Risks
4.4 Analysis of developmental and financing environment of China real estate industry
4.4.1 Loan
4.4.2 Statistics of mortgage loan of developers and individuals

5 Industrial Forecasts and Analysis in 2008
5.1 Effect and prospect of new real estate policy
5.1.1 Effect of new housing loan policy of commercial banks
5.1.2 Effect of expropriation of the property tax
5.1.3 Direction of macro control of future real estate
5.2 Strengthened industrial concentration and more obvious regional difference 
5.2.1 Strengthened industrial concentration
5.2.2 More obvious regional market differentiation
5.3 Continuously rising housing price
5.3.1 Difficulties to accelerate supply of commercial housing
5.3.2 Strong demand for commercial housing
5.3.3 Increase of low cost caused by lack of land supply 
Comprehensive index of real estate, Jan.-Aug. 2007
Investment of commercial housing, Jan.-Aug. 2007
Construction of commercial housing, Jan.-Aug. 2007
Sale of commercial housing in China, Jan.-Aug. 2007
Price index of commercial housing, Aug. 2007
Supply and demand of Shenzhen real estate, Jan.-Aug. 2007
Investment of national economically affordable housing, Jan.-Aug. 2007
Construction of residential housing in China, Jan.-Aug. 2007
Sale of office building in China, Jan.-Aug. 2007
Investment of business building in China, Jan.-Aug. 2007
Chief financial index of listed real estate companies, Q3 2007
Fund source of real estate investment in China, Jan.-Aug. 2007
Statistics of real estate loan from Bank of Communications
Housing price index in chief cities (unit: %)
Comprehensive index of real estate in China, Jan.-Aug. 2007
Investment structure of Beijing commercial housing, Jan.-Aug. 2007
Growth trend of investment & development of Beijing real estate, Jan.-Aug. 2007
Increase trend of developed area of Beijing real estate, Jan.-Aug. 2007
Average price of residential housing in each district of Guangzhou, Q3 2007
Price index of second-hand apartments in each district of Shenzhen, Q3 2007
Investment structure of residential housing in China, Jan.-Aug. 2007
Complete industrial chains of real estate industry
Loan of architectural industry in China, 1999-2007
Changes of fund source ratio of Beijing real estate, Jan.-Aug. 2007
Total qty. of China real estate companies
Urbanization is advanced constantly

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