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在线翻译:
szdaily -> Business
Real estate booms in small cities
    2017-August-1  08:53    Shenzhen Daily

LUXURY lakeside homes and high-rise condominiums are coming up fast in China’s sleepy inland town of Bengbu, Anhui Province, a clear sign that a homebuying frenzy sweeping across the country’s major metropolises and provincial capitals has reached even its smaller cities.

The increase in demand is welcome news for smaller cities that have a massive overhang of unsold houses left from the last real estate downturn three years ago. However, the surge in construction threatens to outpace or match the increased demand for housing, leaving housing inventories untouched.

That will be a worry for China’s policymakers, who want to keep the real estate market stable ahead of a once-every-five-years Communist Party congress in the autumn.

The property market in Bengbu, once a fishing village on the banks of the Huaihe River and Lake Longzi, has been among the top three fastest-growing in China’s 70 main cities in recent months although the local economy is soft — the region’s main glass-making industry has been hit by the general growth slowdown.

Property analysts say property demand in such smaller cities has surged because local governments offer cheap credit and impose next to no restrictions, unlike in the bigger cities, where defenses are in place to fend off speculation and prevent formation of property bubbles.

Real estate in tier-3 and tier-4 cities, ranked below the major metropolises and the provincial capitals, is where the growth is now, analysts say, but the frenzied construction means the stock of unsold homes has remained stubbornly high.

Nearly 50 million square meters of real estate, or about 550,000 homes, were sold in 27 tier-3 cities from January to May this year, which should have reduced inventories by 45 percent, according to Reuters calculations based on a private estimate of inventories in China’s main small cities.

In reality, inventories only dropped 7.1 percent to 102 million sqm, equivalent to 1.1 million homes, data by Shanghai-based E-house China R&D Institute showed, because of new construction.

Prices for new homes in Bengbu surged 3.4 percent on-month in May, the highest among all 70 major cities, data from the Statistics Bureau showed. Bengbu ranked second-highest in April and third-highest in June.

“We think the market will continue to be good even though we don’t expect a drastic rise in prices anymore,” said a manager surnamed Huang at Bengbu Jinhui Real Estate, a private developer that has actively bought land rights in Bengbu.

A unit of Kingyard Real Estate, the firm successfully bid 1.39 billion yuan (US$205.4 million) for a nearly 12,000 sqm (3 acres) parcel of land in Bengbu in May, more than double the starting price, where it plans to build residential housing.

Bengbu’s government capped prices of new projects at 5,800 yuan per sqm May 15, as the city became the fastest-growing market in China that month.

The new rule does not affect housing projects that have been granted a selling permit. Some developers have also sought to offer cheaper units on lower floors so the average selling price for the entire project doesn’t exceed the cap.

The hidden danger, analysts say, is that real estate inventories are often higher than indicated by official figures.

Official inventory data only counts completed homes, while private estimates include homes that are being built but not completed yet. Official data showed nationwide inventories stood at 646 million sqm as of end-June. A Bank of China estimate that includes not-yet-built projects shows China’s real estate inventories stood at 8.28 billion sqm at end-2016, most of which — 5.8 billion — in tier-three and four cities.

(SD-Agencies)

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