A state news agency has quoted the National People’s Congress as saying China should closely watch the country’s property sector and prevent excessive swings in asset prices.

The state news agency website said that legislators believed that there were too many uncertainties in the property market and that the potential for risk should not be ignored.

State figures show that property prices in 70 major Chinese cities rose 8.2% year-on-year in June.

However, falling transaction volumes have been putting pressure on developers as prospective home buyers wait on the sidelines in anticipation of a major downward correction of regional property prices.

Figures released by state planners show that prices of new residential properties rose 9.2% year-on-year in June, falling one percentage point from the month before.

State leaders said they want to promote a ‘healthy and stable development of the property and capital markets.’
Source: Quamnet

Capitaland, Southeast Asia’s largest real estate developer by market capitalization, has set up a $1 billion private equity fund to invest in prime commercial properties in China.

CapitaLand said in a statement to the Singapore Stock Exchange that it has taken a major position in the Raffles City China Fund. This successfully closed at $1 billion and CapitaLand has subscribed for a 50% sponsor stake in the RCCF.

The RCCF intends to acquire CapitaLand’s effective 55.9% stake in the completed Raffles City Shanghai and 100% stake of the other three Raffles City projects in Beijing, Chengdu and Hangzhou, due to be completed between 2009 and 2012.

(It should be noted that Sir Stamford Raffles after whom all this is named and who is seen in our illustration never once came near China.)

The RCCF is CapitaLand’s eighth real estate private equity fund in China.

At present, CapitaLand has total assets under management of over $13.57 billion from its five REITs and 15 private funds excluding RCCF.

Entering China early in 1994, the Singapore-based company, which owns more than 70 malls and developed homes in cities such as Shanghai and Beijing, made close to 30% of its revenue in China last year, up from 20% in 2006.
Source: Shanghai Daily

Industrial land prices and rents for industrial facilities will rise significantly in Shanghai over the next few years on robust demand from investors and occupiers. This according to  CB Richard Ellis, a leading real estate services firm.

Andrew Hatherley, executive director for Industrial and Logistics Services, CBRE China said that over the next four years, prices of the city’s industrial land are set to jump 55% while the rents for an average industrial facility are likely to gain 43% between 2008 and 2011.

Continued control over industrial land supply, coupled with a limited quota for new sites, led to a substantial jump in industrial land prices in the city in the first half of this year.

CBRE, in its latest market research report, said between January and June, the average industrial land price in Shanghai gained 28.2% to RMB1,304 ($190) per square meter,

The rent for an average facility climbed 16.9% to RMB38.8 a square meter a month in the same period.

The CBRE report said in the first six months of this year, industrial land prices in nearby cities jumped 67.4% from a year earlier while facility rents rose 25.2%.
Source: Shanghai Daily

Over the past two years the run-up to the Olympics has meant a rush of new commercial and residential space in the Beijing market.

However, the boom has been accompanied by fears that once the games end on August 24, Beijing could plunge into a property slump.

Most experts do not believe this likely. Property agents say the market may see higher vacancy rates and lower rents and sale prices in the months immediately after the Olympics, but they expect spaces to be filled eventually because Beijing remains a key city for doing business in China.

On the other hand, property prices in Beijing, like those in the rest of China, have been falling from their spectacular highs, and they may correct further.

Ben Christensen, head of research in Beijing at property agent Jones Lang LaSalle said speculation that housing prices are on their way down is helping to depress prices.
Source: Wall Street Journal

Chinese developers are trying to persuade the government to loosen macro controls surrounding real estate.

Heads of real estate companies, such as Ren Zhiqiang, chairman of Huayuan Group, and Feng Lun, chairman of Vantone Group, have appealed to the government to ’save the market’ through the media and other channels.

Nie Meisheng, chairman of the China Real Estate Association, said that the government would probably make adjustments to the current real estate control policies. He said, ‘It is not the current problems in the real estate market, but the possible influence on the wider economy brought about by a real estate market downturn, that matters. I believe this time the central government will be very cautious.’

The market-saving suggestions that have been reported to the central government include properly adjusting real estate control policies, and loosening tight credit.

However, Gu Yunchang, vice chairman of the China Real Estate Housing Research Association, another nationwide real estate organization, has strongly opposed the idea of ’saving the market’.

Gu Yunchang points to the data issued by the National Bureau of Statistics: in July the selling price for newly built housing increased by 9.2% over the same month last year, and is 0.1% up over the previous month.
Source: China Stakes