China Vanke says property sector's 'golden era' over, demand outlook solid

Wed May 28, 2014 2:58am EDT
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By Clare Jim

DONGGUAN (Reuters) - The days of rapid growth in China's real estate sector are over, but the government's urbanization drive will continue to drive demand for the next 15 years, the country's biggest residential property developer China Vanke Co Ltd said.

After climbing at double-digit rates through most of last year, home prices in China started cooling in late 2013, with the annual growth in average new home prices slowing to an 11-month low in April as a sustained campaign to clamp down on speculative investment and easy credit gained traction.

Vanke president Yu Liang said the slowdown heralded the end of the golden era for Chinese real estate, but said the outlook remained healthy thanks in part to urbanization.

"The white silver era has just begun," Yu told reporters at its research and development center in the southern Chinese city of Dongguan this week.

"The industry is now after quality and service and back to real demand...The industry was worth 8.1 trillion yuan ($1.30 trillion) last year, even growing at a single-digit rate, it's still large enough for us."

His comments came nearly a week after ratings agency Moody's lowered its outlook for China's property sector and forecast flat to 5 percent yearly growth over the next 12 months, compared to 26.6 percent growth at the end of 2013.

Yu said he believed government measures to curb speculation in the property sector had worked and prices were now more sustainable.

"I don't agree there's a bubble. Since the tightening measures in 2008, financial leverage of developers and individual investors has dropped significantly," Yu said.   Continued...

A general view of a residential area in the Puxi district of Shanghai August 2, 2013.  REUTERS/Carlos Barria