CapitaLand , a Singapore developer whose China operations were its only profitable unit last quarter, says categorically that China’s real estate market recovery will be driven by domestic demand and isn’t in a "bubble".Liew Mun Leong, Chief Executive Officer at the Singapore-based developer said most buyers for their residential projects are home buyers. "I have not seen excessive investment in the real estate sector so far. Prices have gone up beyond 2008, 2007, but are still lower than pre-Asian crisis so there is still room to creep up."
China housing sales have surged 45.3% on-year in the first five months as stimulus spending stoked investment and domestic demand. Residential prices in 70 major Chinese cities gained 0.2% in June from a year earlier, and rose 0.8% from May.
CapitaLand, which had been looking to use its cash to acquire distressed assets in China in March this year, said the real estate recovery made the search more difficult.
"We thought there would be quite a fair bit of distressed assets to take advantage of, but the reality is that the China market recovered so fast, companies no longer remain distressed in their financial management," Liew said.
Bloomberg said contributions from China helped mitigate the volatility in the developer’s earnings.
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