[photopress:property_nanshan.JPG,full,alignright]Chinese property stocks have been one of the worst hit sectors in the current market downturn, which entered its fourth month last week. Some analysts project the trough is near and that the fundamentals remain favorable.
While most market participants still believe there will be stricter regulations and more credit tightening to come, Fitch ratings agency argues that robust economic growth, urbanization and renminbi appreciation will continue to drive demand for Chinese property.
It also says limited land supply, land hoarding, delay in property development and sales are also expected to create a shortage in the housing market.
Analysts at UBS are cautious about the China property market in the near term but longer-term they agree with Fitch and expect demand-driven growth in the physical market to resume in the second half of this year.
Their counterparts at Credit Suisse are even more optimistic and predict that strong momentum in home sales will return in the first and second quarters.
However, the bank contends that 2008 will be a much tougher year than 2007 for the Chinese developers.
In general, analysts favour property developers operating in northern China where prices haven’t risen at the same rapid pace as in the large cities further south.
Some analysts believe Shenzhen will be the worst hit among the four major cities, because of the high percentage of speculators among the property buyers in 2006 and 2007.
Prices at several Shenzhen real estate projects corrected by more than 20% in 2007 and there could be another 20% of decline.
However there seems to be general agreement that although the future looks positive there are likely to many bumps in the road.
Source: Finance Asia