Business / Industries

China Vanke says property sector's 'golden era' over

(Agencies) Updated: 2014-05-28 15:05

China Vanke says property sector's 'golden era' over

A general view of a residential area in the Puxi district of Shanghai August 2, 2013. [Photo/Agencies]

The days of rapid growth in China's real estate sector are over, but the government's urbanisation 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 for the property sector remained healthy.

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"The white silver era has just begun," Yu told reporters at its research and development centre 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."

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.

Vanke has joined a host of Chinese developers in stepping up its overseas ventures at a time when tighter liquidity, over supply and slowing transactions on the mainland are fuelling worries over the outlook for the country's property market.

The president's comments came just days after the chairman of SOHO China sounded alarm over the real estate sector.

"I am not upbeat about the residential market. I think China's real estate is like the Titanic and it will soon hit an iceberg up front," local media quoted Soho China chairman Pan Shiyi as telling a financial forum last week.

"When it hits, it doesn't only create a risk for the real estate industry, but a bigger risk for the financial industry."

China Vanke also aims to list in the second half of June, Yu added, part of its effort to expand its business overseas and tap the offshore capital market.

It announced in January last year it would move its foreign-currency B-shares to Hong Kong and got official approval from Hong Kong's regulator last week, becoming the third company to leave the mainland's B-share market in Shenzhen.

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