Slump drives home sellers to the wall

By Hu Yuanyuan (China Daily) Updated: 2014-05-15 08:29

Vanke and Shimao plan to attend the Expo Milano 2015, hoping to boost their brand image worldwide and expand business overseas.

"This is a perfect chance to show Shimao in the international arena, and we will seek opportunities to better integrate our domestic and international business," said Chairman Xu Rongmao.

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William Kwok, director of Cheung Kong Real Estate Ltd, said the cooling market and the tight cash flow of some property developers will give his company a better chance to obtain sites in Beijing and Shanghai.

But even while some developers are struggling for survival, most analysts said that China's property bubble isn't about to burst - at least not yet.

Barclays Capital, a division of Barclays Plc, said there will be a gradual deflating of the bubble over 2014-15, based on price-sales dynamics, the central government's new stance and "bottom line" management by developers. It also cited "judicious" cyclical government policies such as monetary easing and the loosening of purchase restrictions.

"We believe the government will likely tolerate some further correction, although not too steep, and also allow local governments more discretion to use 'differentiated housing policies' that fit local situations," said Chang Jian, China economist with Barclays.

UBS AG said the central government can still use policy to mitigate the downturn.

"We believe the government still has the means and willingness to mitigate a property downturn, including by increasing infrastructure investment and relaxing property policies," said Wang Tao, China economist with UBS.

"As such, our base case forecast is for the property downturn to remain manageable," Wang added.