Housing sales rebound predicted for China in 2013 and Excavating mountain for new city

December 29, 2012

Business, International

Housing sales rebound predicted for China in 2013

Guangzhou skyline


BEIJING– Industry observers say China’s real estate sector is likely to pick up steam in 2013, as they expect increased housing sales due to growing market demand.

The anticipation, which comes amid reports of rebounding home prices and increasing housing transactions in some cities, suggests future complications in the government’s campaign to rein in the country’s runaway housing prices.

Despite strict control measures, many large property developers have reported good sales and an improved financial situation in 2012, said Zhang Dawei, a marketing director with the Centaline Group, a Hong Kong-based real estate company.

“It’s likely they will regain their zeal for land purchases, helping the land market to climb out of the trough in 2013,” Zhang said.

Surging housing prices have been a significant source of complaints in China. The government has implemented a string of policies, including bans on third-home purchases and property tax trials, to cool the real estate sector since early 2010.

But the property market has shown signs of warming in recent months, particularly after the central bank twice cut interest rates and the reserve requirement ratio for banks to buoy the economy earlier this year.

In November, 53 cities out of a pool of 70 major cities recorded higher new home prices than a month earlier, up from 35 in October, according to statistics from the National Bureau of Statistics (NBS).

Meanwhile, total housing sales surged 9.5 percent year on year to 5.35 trillion yuan (850.83 billion U.S. dollars) in the first 11 months, up from a rise of 5.6 percent seen in the January-October period, according to the NBS.

On Thursday morning, Xinhua reporters saw hundreds of people lining up outside a housing transaction center in Beijing’s suburban Fengtai district. Many were there to make their housing purchases officially legal.

“Such large crowds were not seen earlier this year or even during the same period last year,” said one of the center’s employees.

Hu Jinghui, vice president of 5i5j Real Estate, said that although China’s restrictive policies have helped contain speculation, robust demand from first-time home buyers will continue to push up sales.

China is undergoing rapid urbanization. Its urban population outnumbered that of rural areas at the end of last year, an increase that is expected to give momentum to urban property markets as new settlers seek accommodation in cities.

Demand was temporarily suppressed over the last two years, as the malaise in the market brought about by stringent government controls was believed to have deterred many potential buyers.

Buyers began to rush into the market in November, however, as they feared an upturn in prices would soon materialize due to an absence of tougher control measures and credit policies, which many say are signs of loosening government controls, Zhang said.

“The government has mostly been reiterating (existing control measures) this year without taking further action to tame the market,” Zhang said. “A string of signs like this is buoying the market.”

This week, Chinese real estate developers’ share prices surged on official remarks that China would “actively and steadily” push forward urbanization in 2013.

Hu said housing sales and prices nationwide will likely continue to rise in 2013, although a dramatic surge is unlikely. He added that the pace of recovery will be quicker in big cities like Beijing and Shanghai.

Experts have urged the government to stick to existing property controls and pass new regulations to offset the impact caused by the warming of property market.

“China’s property controls are still in a crucial stage. It’s important that the government show resolution in its efforts to curb price hikes,” Zhang said.
The government has said it will stick to its property market controls next year while building millions of affordable housing units to divert demand.
Video: China to build 6 million units of affordable housing in 2013

China to flatten 700 mountains for new metropolis in the desert
Lanzhou new area plan to begin with ‘mountain-moving project’, but financial and environmental wisdom of project questioned

Jonathan Kaiman in Beijing
The Guardian

A long, long time ago, an old Chinese peasant named Yu Gong decided to move two inconveniently located mountains away from blocking the entrance to his home. Legend has it he struggled terribly, but ultimately succeeded. Hence the Chinese idiom “Yu Gong moves the mountains.” Where there’s a will, there’s a way. Now Chinese developers are putting old Yu to shame.

In what is being billed as the largest “mountain-moving project” in Chinese history, oneof China’s biggest construction firms will spend £2.2bn to flatten 700 mountains levelling the area Lanzhou, allowing developers to build a new metropolis on the outskirts of the north-western city.

The Lanzhou New Area, 500 square miles (130,000 hectares) of land 50 miles from the city, which is the provincial capital of arid Gansu province, could increase the region’s gross domestic product to £27bn by 2030, according to the state-run China Daily. It has already attracted almost £7bn of corporate investment.

The project will be China’s fifth “state-level development zone” and the first in the country’s rapidly developing interior, according to state media reports. Others include Shanghai’s Pudong and Tianjin’s Binhai, home to a half-built, 120-building replica of Manhattan. China’s state council, its highest administrative authority, approved the Lanzhou project in August.

The first stage of the mountain-flattening initiative, which was reported on Tuesday by the China Economic Weekly magazine, began in late October and will eventually enable a new urban district almost 10 square miles in size northeast of downtown Lanzhou – a small, but important part of the Lanzhou Nnew area project to be built.

One of the country’s largest private companies: the Nanjing-based China Pacific Construction Group, headed by Yan Jiehe, is behind the initiative. The 52-year-old former teacher is portrayed in China as a sort of home-grown Donald Trump – ultra-ambitious and preternaturally gifted at navigating the country’s vast network of “guanxi”, or personal connections.

Yan was born in the 1960s as the youngest of nine children. After a decade of working as a high-school teacher and cement plant employee, he founded his construction firm in 1995 and amassed a fortune by buying and revamping struggling state-owned enterprises. In 2006 the respected Hu Run report named Yan – then worth about £775m – as China’s second-richest man.

His latest plan has evoked a healthy dose of scepticism. Lanzhou, home to 3.6 million people alongside the silty Yellow River, already has major environmental concerns. Last year the World Health Organisation named it the city with the worst air pollution in China. The city’s main industries include textiles, fertiliser production and metallurgy.

Liu Fuyuan, a former high-level official at the country’s National Development and Reform Commission, told China Economic Weekly that the project was unsuitable because Lanzhou is frequently listed as among China’s most chronically water-scarce municipalities. “The most important thing is to gather people in places where there is water,” he said.

Others also pointed to the financial risk of building a new city in the middle of the desert. “All this investment needs to be paid back with residential land revenue, and I don’t see much on returns in these kinds of cities,” said Tao Ran, an economics professor at Renmin University in Beijing. “If you have a booming real estate market it might work, but it seems to me that real estate in China is very, very risky.”

In an email interview, a China Pacific Construction Group spokeswoman dismissed criticisms of the project as unjustified. “Lanzhou’s environment is already really poor, it’s all desolate mountains which are extremely short of water,” said Angie Wong. “Our protective style of development will divert water to the area, achieve reforestation and make things better than before.”

Yan’s plans could be considered “a protective style of development, and a developmental style of protection”, she said, adding: “I think whether it’s England or America, or any other country, no one will cease development because of resource scarcity caused by geography.”

A promotional video posted on the Lanzhou new area website shows a digitally-rendered cityscape of gleaming skyscrapers and leafy parks. Against a driving operatic score, the camera zooms out from a large government building to reveal features of the area’s imagined urban topography: a clock tower, a new airport, an oil refinery, a light-rail system, and a stadium packed with cheering fans.

The new area “will lead to an environmentally sustainable economy based on energy-saving industries” including advanced equipment manufacturing, petrochemical industries and modern agriculture, wrote Chinese Central Television on its website.

The Lanzhou city government could not be reached for comment.

Video: 700 Mountains will be leveled for Lanzhou New Area city expansion
China has mapped out a new State-level development zone in the inland Gansu province. The Lanzhou New Area has been sectioned out by the central government as the fifth national-level development zone

Video: Lanzhou Area Development

Video: City : Lanzhou, China


Lanzhou, China

Lanzhou New Area



Excavating mountain

Construction vehicles clear land for construction in Baidaoping village in Lanzhou, Gansu province on Dec 10, 2012. The city launched a project in October 2012 to transform the low mountains in Baidaoping village into land for construction. The project, covering an area of 25 square kilometers, will level off hundreds of hills within six months.

Lanzhou mountain removal

Lanzhou mountain removal

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