Inside the Great Wall:Hong Kong/China Property Daily

Inventory clearance continued to be the key in 2016

    According to expert from 5i5j.com, demand in Tier-1/2 cities with strongereconomies is yet to be satisfied but the oversupply has been seen in manyTier-3/4 cities. Hence the divergent markets will be continued in 2016 andthere is still pressure on inventory clearance. According to expert from Soufun(SFUN.US), currently the inventory period in Tier-1 is less than one year andthat for Tier-2 cities is about 2 years while the inventory period for Tier-3 citiesis over 5 years. Many of the local governments have launched variousmeasures on inventory clearance. (Hexun)

    Land costs for large developers increased by 40% in 2015

    According to E-House (EJ.US), average land acquisition cost in 2015 wasRMB3,341 psqm, reaching the historical high. ASP of commodity houses inChina also reached record high of RMB6,792 psqm. Sales volume ofcommodity residential properties reached 1.29bn sqm, which was close to thepeak of 1.31bn msqm in 2013. For the 20 leading developers, total landacquisitions and average land cost has increased by 40% YoY to RMB423bnand RMB5,227 psqm respectively. (Hexun)

    Land cost in Shanghai increased by 85% in 2015

    According to E-House (EJ.US), average land cost in Shanghai in 2015 hasincreased by 85% YoY to RMB13,745 psqm. The land costs in other Tier-1cities such as Beijing and Shenzhen has increased considerably in 2015.

    Expert from Centaline commented that, although the market in Tier-1 cities ishealthy, the land cost is too high and the projects from the lands with highcosts will be launched gradually since 2H16. He expects the ASP have to bedouble if developers would like to make profit, which will be an issue when theprojects are launching. (Hexun)

    Sales volume dropped in both the new primary projects and secondary estates

    During the weekend, Henderson (0012.HK) has launched the first 70 units inHarbor View in Sham Shui Po, their first new project in 2016. Priced at ASP ofHK$15,038psf, the project had only 9 units sold during the weekend,representing just 13% of the first batch launched. Henderson commented that,on the back of the volatile stock/ FX market and the cold weather, buyers haveturned cautious in entering the market and dragged the first-day performanceof the new project. In the meantime, the secondary market has also witnesseda remarkable turnaround in buyer sentiments. According to Centaline, whileLuk Yeung Sun Chuen (the major estate in Tsuen Wan) has recorded animproved sales during the first 2 weeks in 2016, under the volatile stock/ FXmarket and less units for sale at attractive terms, the estates has not recordedany transactions during last week (as compared to 4 units sold in the weekbefore). (Oriental Daily)

    Weekend sales in major 10 secondary estates fell back by 67% WoW

    Over the past weekend, major 10 estates had only 4 units sold, down 67%WoW and falling back to the single-digit level. Midland commented that, onthe back of the low seasonality as Chinese New Year is approaching, theoverall sales volume could reach a new low since record started. (HKET)