Recovery in demand boosts sales of homes
By Cao Qian | 2009-3-17
A rebound in demand from end-users and investors boosted sales of homes in Shanghai last week to the highest level over the past 16 months.
A total of 323,800 square meters of new homes, excluding those built for relocation uses, were sold in the city between March 9 and March 15, an increase of 38.3 percent from a week earlier, according to statistics released yesterday by E-House (China) Holdings Ltd.
"The (sales) figure hit a nearly 70-week high and was almost equivalent to the weekly volume reached during the market heydays more than a year ago," said E-House analyst Xue Jianxiong. "The past month has witnessed an increasing demand from end-users, which mainly include newly weds and relocated residents, as well as some investors from other parts of the country."
The 4-day Spring Real Estate Exhibition, which closed on Sunday in the city, also boosted buying momentum, analysts said. The annual event drew 130,000 visitors to the Shanghai Exhibition Center, a jump of more than 70 percent compared to 2008, according to its organizer.
"The transaction volume of new houses hit 40,000 square meters and 51,000 square meters respectively in the city on Friday and Saturday, and reached 67,400 square meters on Sunday, the highest single-day volume in Shanghai since 2008," Lu Qilin, deputy head of research at Shanghai Uwin Real Estate Information Services Co, told Shanghai Daily yesterday.
While end-users emerged as the dominant force among home buyers, some investors have begun to tap the local property market which underwent a correction for nearly a year, analysts said.
At a latest serviced apartment project with existing leasing contracts, located in the Gubei area of Changning District, 42 units out of a total of 112 were sold within five days at an average price of 27,740 yuan (US$4,061) per square meter. Another 40 units in the same project have been booked by investors from Wenzhou in Zhejiang Province who have paid deposits, industry sources said.
cont'd..... True, it may be tempting to say that this means little in the context of recovering losses. One might also note that the fundamentals for Hong Kong based property developers working on the mainland are strong.
The Claymore/AlphaShares China Real Estate Fund (TAO) tracks an index that measures the performance of publicly-traded companies and real estate investment trusts ("REITs") which are open to foreign ownership and derive a majority of their revenues from real estate development, management and/or ownership of property in China. The 40 companies in the index have an average P/E of 10.5 and an average P/B of 1.
The distribution yield is annual and it doesn't appear to be particularly exceptional. The yield may be slightly north of 3%.
Nevertheless, the potential wisdom in using TAO may be in the notion that China is spending a great deal on infrastructure. The companies in the Claymore/AlphaShares China Real Estate Fund (TAO) are fairly well-established developers, and they stand to benefit from China's stimulus package.
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China Real Estate Investing Stands to Benefit from Stimulus Package I spent a fair amount of time in Southeast Asia in the late 80s and early 90s. I lived for about 3 years in Hong Kong as well as 1 year in Taiwan. And naturally, I always had an eye on China's "mainland."
Believe it or not, most Hong Kong residents had embraced the change from England's colonial rule to China's "one-country-two-governments" promise. Call it cultural pride... call it "white ghost" fatigue. The fact of the matter was that folks in Hong Kong weren't as fearful about China's new government as an outsider might have been led to think.
One very big reason? Many HK residents were certain that they were going to get rich quickly. Hong Kong was one of the world's largest examples of thriving capitalism. Scores of mainland workers were expected to arrive in Hong Kong. And real estate speculators had been bidding up values in 1993, 1994, 1995, 1996, 1997.
When China took the reins of Hong Kong in 1997, scores of workers did NOT cross the former borders into the popular port city. Instead, they went to Shanghai and/or other "economic zones." Property values in Hong Kong fell 50% overnight and they've never come close to reaching their former highs.
In contrast, China property values in places like Shanghai, even Beijing, soared. Granted, values took a huge hit after the 2008 Olympics. But many analysts are expecting property development to kick back into a high gear shortly.
Enter one possibility: the Claymore/AlphaShares China Real Estate Fund (TAO).
Claymore's timing for the release of TAO could not have been much worse. In the year December 2007 when TAO first began to trade until November 2008 (circa the credit crisis bottom), TAO lost more than 65% in value. The Vanguard REIT Fund (VNQ) for U.S. real estate investment trusts also fell 60%+, but it took longer for the Vanguard REIT Fund (VNQ) to troll those depths.
But things can change in the blink of an eye! The Claymore/AlphaShares China Real Estate Fund (TAO) is nearly 50% higher off its lows, while U.S. REITs are still unsure of their direction.
Of course the broader market will help out the stock a bit....but as anticipated EJ is also seeing a surge in volume transaction sales in china right now which is only now being reflected in the stock...told you so! :) The really funny thing is that on the first day you posted on dec 18th, that was the same day I was telling everybody about the likely increase in volume transactions, which is now happeining....you should've listened to my advice you big sore loser!!! Oh, here is the link about the likely increase in volume transactions which was posted on the same day you initally started posting your lies on this message bd. in what I suspect is your efforts to get the stock cheaper. Told ya so!!!!! :)
See China version of subprime mortgages, "假按揭", explained by 时寒冰 (excerpts) on March 20, 2009.
If needed, follow the steps below to get gibberish translation of the whole article by Google's Chinese-English online translator:
(1) Copy the Chinese title, and paste it for Google Search.
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Hate to break it to you but ehouse is not a developer. The current situation will allow E house to see increasing volume in sales as developers scramble to sell what they made. Dont even try to compare what you call subprime above in china to the subprime here, the fact of the matter is that in China, consumers mortgages are not common and even when they are used, loan to value ratios are very low, so a fall in real estate prices does not lead to the sort of large scale foreclosures that we see here. Try again!!!!!!!!