China's property sector draws closer to exit from protracted slump - ET RealEstate (2024)

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China's property sector draws closer to exit from protracted slump - ET RealEstate? ›

China's property sector draws closer to exit from protracted slump. Home sales by floor area in the first two months of 2023 fell 3.6% from a year earlier, according to data from the National Bureau of Statistics (NBS), compared with a 24% decline for the whole of 2022.

The slower pace of home sales meant less cash flow for China's highly leveraged real estate developers, like Evergrande, setting the stage for credit defaults across the real estate and construction sectors. As the surviving developers were forced to deleverage, they halted construction on unfinished projects.

China's property sector has avoided a collapse but remains a key drag on the world's second-largest economy. Signs of renewed weakness are emerging in the residential market, with a rebound in home sales slowing in May to just 6.7% from more than 29% in the previous two months.

In play now in China, where around 70% of household wealth is in property, this phenomenon is weighing on the post-pandemic recovery of household consumption, which Chinese policymakers have vowed to make a more prominent driver of economic growth.

In April, the analysts pointed out that national property sales fell to 900 billion yuan ($126.87 billion), below last year's monthly average of 1.1 trillion yuan. For all of 2023, S&P expects China developer sales to fall by about 3% to 5% — slightly better than the previously forecast 5% to 8% drop.

The property market faced severe downturns in 2022, with sales by floor area plunging more dramatically than ever before. This was largely due to the government's crackdown on debt-financed property, a policy that aimed to break China's addiction to debt.

If you look at land sales, Chinese real estate is in dire shape. As a result, there was a two trillion yuan ($290 billion) decline in income from land sales last year. And that drop continued into the first two months of 2023.

China's post-pandemic recovery is sending a clear and urgent message to the nation's fallen property tycoons: shape up, reorganise and get on with working out their debt. The rush is on. China Evergrande's Hui Ka-yan and his beleaguered industry peers have set March as a key target.

In the last 10 years, Chinese investors have bought US$188.6 billion worth of property in the US – more than a fifth of total foreign investment.

China's struggling real estate industry is expected to see an L-shaped recovery in the coming years, placing a drag on the world's second-largest economy, according to a research note by Goldman Sachs Group Inc.

Who is richer China or America? ›

1- United States: Located in North America, the United States ranks third in the world in terms of size and population. It has again beaten China, to become the richest country in the world.

China owns roughly 384,000 acres of U.S. agricultural land, according to a 2021 report from the Department of Agriculture.

China dominates every aspect of the bilateral economic relationship, as a net exporter, net creditor and net investor, despite Russia long being a richer country than China.

Indeed, according to current projections, China's population is likely to drop below 1 billion by 2080 and below 800 million by 2100. Those specific numbers will surely change; the downward shape of the curve almost certainly will not. India by contrast will keep growing quickly for a while.

China Earnings Expected to Rebound in 2023 as U.S. and Global Earnings Slow. As of November 23, 2022. 2022 and 2023 values are consensus forecasts. Past performance is not a reliable indicator of future performance.

Buying a home during a recession can sometimes be a good idea — but only for people who are lucky enough to remain financially stable. If you're thinking about buying during an economic downturn, be sure to enlist the help of an experienced local real estate agent.

China's economic growth is in long-term decline after hitting a peak of 14.2% in 2007, hampered by hurdles including an aging, shrinking workforce and growing curbs on Chinese access to Western technology due to security concerns.

The Guangdong-based company said the market has struggled with weakening expectations, sluggish demand and declines in property prices. “All these exert mounting pressure on all participants in the property market, which has slid rapidly into severe depression,” the company said.

But mainly because property developers have run out of money. You might have heard of Evergrande. So they would go into smaller areas, pay top dollar for the land, then sell the condo projects before they're built. And usually, they would collect large down payments, usually 30%.

What is the average price of a house in China? ›

In 2021, the average price for residential real estate in Shenzhen was over 61.6 thousand yuan per square meter. This was the highest price among all major cities in China, with the average price across the country amounting to 16,533 yuan per square meter.

Some of the risks associated with investing in China include its communist structure, regulatory differences, and insider trading. Investment opportunities in China include U.S. corporations that have a presence in the country, mutual funds, and ETFs.

To help solve the debt crisis among property developers, Beijing will set up a rescue fund of up to 300 billion yuan (US$44.3 billion), starting with 80 billion yuan. The money may be used to help developers complete unfinished projects, and purchase units which can be let out as rental housing.

BEIJING, June 1 (Reuters) - China's new home prices fell for the first time in four months in May and home sales slumped, according to a private survey, adding to pressure on a property market which is struggling to stabilize from a sharp slump.

China's property market has an oversupply of unsold apartments. In February, China had 3.5 billion square feet of completed but unsold apartments, equivalent to around four million homes, the worst oversupply since 2017.

Governor Ron DeSantis of Florida signed a series of bills Monday that bans Chinese citizens from buying land in the state.

Canadian investors lead this pack, by a long shot, with nearly 9.4 million acres of U.S. land — more acreage than 44 of the top 50 foreign landowners combined, according to the report. (These people own the most land in America.)

Who Is the Largest Landowner in the U.S.? The largest landowners in the United States are the Emmerson family, with 2,330,000 acres of land.

Capital Economics, a research and consultancy firm based in London, would put the number far higher still. It estimated last year that mainland China was host to about 30 million unsold properties, while about 100 million more were likely to have been bought but not occupied.

As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).

Will China ever overtake the US? ›

There is still much work to be done to propel China to the top of the world's economy, but it is certainly possible that the Chinese economy can surpass the power of the US by 2050. It may also be too early to make definitive projections of China's future.

When comparing Japan's GDP with that of China's it is clear that Japan is far wealthier than its neighbor across the sea. In 2019, Japan's total GDP was estimated at around $5 trillion while China's was estimated at around $14 trillion - making it almost three times larger than Japan's economy.

Many Chinese and Hong Kong nationals may find this an intriguing option because of the relatively cheaper housing prices in the United States (compared to metro areas of other western countries) and the availability of coastal area properties in many country locations.

China isn't just Moscow's diplomatic partner in opposing what they see as U.S. domination of global affairs. Its thriving economy is the biggest buyer of Russian oil and gas exports, pumping billions of dollars into Putin's treasury and helping the Kremlin resist Western sanctions over its invasion of Ukraine.

Russia has a GDP per capita of $26,500 as of 2020, while in Germany, the GDP per capita is $50,900 as of 2020.

Fun facts: three U.S. states have larger economies than Russia: California ($3.1 trillion), Texas ($1.78 trillion) and New York ($1.7 trillion). And California's GDP is more than twice the GDP of Russia. The Russian economy is twice the size of the little island of Taiwan.

According to a recent report by Harvard University, “From economic complexity growth estimates, India is growing at the annual list at the rate of 7.9 percent as the fastest growing country for the coming decade.

According to Policy Brief No. 153 from the United Nations Department of Economic and Social Affairs (UN DESA), entitled “India overtakes China as the world's most populous country”, between 2023 and 2050, the number of persons aged 65 or over is expected to nearly double in China and to increase by more than double in ...

Is China going to be a superpower? ›

Some consensus has concluded that China has reached the qualifications of superpower status, citing China's growing political clout and leadership in the economic sectors has given the country renewed standings in the International Community.

"In the first half of 2023, the S&P 500 is expected to re-test the lows of 2022, but a pivot from the Federal Reserve could drive an asset recovery later in the year, pushing the S&P 500 to 4,200 by year-end," the investment bank said in a research note.

China's GDP should grow 5.7% per year through 2025 and then 4.7% annually until 2030, British consultancy Centre for Economics and Business Research (CEBR) forecasts. Its forecast says that China, now the world's second-largest economy, would overtake the No. 1-ranked U.S. economy by 2030.

Most experts predict a bullish market outlook for the Indian stock market in 2023. Positive economic growth and government policies are expected to drive up stock prices. Additionally, the low-interest rates and ample liquidity are expected to attract investors toward equities.

Shenzhen, a city in southeastern China, is one of the billionaire capitals of the world. The city is home to some of China's wealthiest people, many of whom founded massive tech companies. But there's also a dark side: Most residents cannot afford to buy a house in Shenzhen.

Down-payment requirements run as high as 80 per cent for big-city buyers, who save for years and tap parents for funds. That makes forced selling much rarer than in other countries, where downturns can push mortgages underwater, meaning the loan is worth more than the home.

Domestic ratings company China Chengxin International Credit Rating estimates the hidden debt of local governments was in a range of 52 trillion yuan to 58 trillion yuan at the end of 2022, about 1.5 to 1.7 times the amount of explicit debt.

The imbalance between supply and demand; resulted from of strong economic growth creating hundreds of thousands of new jobs (which increases demand for housing) and the insufficient construction of new housing units to provide enough supply to meet the demand.

For many years, the bubble in the Chinese housing market led to rising property prices and developers scrambled to build ever-more units. But demand for units has now shrunk, due to a number of factors, including increasing unaffordability of homes, an aging population, and slowing population growth.

Which country owe the most debt to China? ›

At the end of 2021, of the 98 countries for whom data was available, Pakistan ($27.4bn of external debt to China), Angola (22.0bn), Ethiopia (7.4bn), Kenya (7.4bn) and Sri Lanka (7.2bn) held the biggest debts to China.

China and Japan are the largest foreign investors in American government debt. Together they own $2 trillion — more than a quarter — of the $7.6 trillion in US Treasury securities held by foreign countries.

Key Takeaways. China invests heavily in U.S. Treasury bonds to keep its export prices lower. China focuses on export-led growth to help generate jobs. To keep its export prices low, China must keep its currency—the renminbi (RMB)—low compared to the U.S. dollar.

Chinese buyers comprise one of the largest groups of foreign buyers of residential property in the United States. Historically, between 20,000 and 40,000 residential properties were bought by Chinese nationals, but in 2022, both the sales volume and percentage of all foreign-bought properties declined.

China owns roughly 384,000 acres of U.S. agricultural land, according to a 2021 report from the Department of Agriculture.