China’s housing market is under mounting pressure amid tightened liquidity and stringent home purchase restrictions.
Official data shows 15 major cities have seen moderating year-on-year price increases in May. Compared with the previous month, eight cities showed declines, with Sanya being the worst performer, falling 1.2 percent.
It seems various cooling measures have started to take effect. If authorities continue to tighten mortgage loans and impose more restrictions on financing for property developers, they would be forced to slash prices in the coming months.
The increasingly harsh operating environment has prompted some developers to seek new opportunities elsewhere.
Some came to Hong Kong. Some ventured into other Asian countries.
Hong Kong housing prices have more than doubled in recent years.
While some people began to show concern and are worried about a setback, Chinese newcomers have been very aggressive, paying top dollar for land plots.
Even local developers said they have no idea why the Chinese players are so bullish. We shall see whether these Chinese developers are going to make it in Hong Kong.
Some are setting their sights on Southeast Asian nations which have a high population density, a young demographic and robust economic growth.
In fact, as an early bird, Country Garden Holdings (02007.HK) has developed four large-scale property projects in Malaysia over past five years.
In addition to local clients, Country Garden has also been targeting buyers in China and Hong Kong, including those interested in buying overseas properties for investment or immigration purposes.
Meanwhile, Dalian Wanda, owned by property tycoon Wang Jianlin, plans to ramp up investment in India while it scales back activity at home.
The growth potential of emerging countries is undoubtedly alluring but Chinese developers are subject to as much policy uncertainty, if not more than in its home turf.
But for those who can overcome such challenges, overseas business could be an important income stream as well as a stock price driver.
This article appeared in the Hong Kong Economic Journal on May 19
Translation by Julie Zhu
[Chinese version 中文版]
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