China Property

China Property: Superman avoiding like it is kryptonite; developers agree One of Asia’s richest men, Li Ka-Shing (aka “Superman” for his investing prowess) has been selling of his properties in China. From Sep last year through Apr this year, the Li family, through its corporate vehicles, has sold Metropolitan Plaza shopping mall in Guangzhou (US$387m), Oriental Financial Center office tower in Shanghai (US$1.2b), and the landmark Pacific Century Place integrated project in Beijing (US$928m). Other prominent mainland developers are nodding their heads in agreement. For example, in Feb, Soho China sold two of its office projects in Shanghai for US$837m. According to the Wall Street Journal, last week, China Vanke’s vice chairman Mao Daqing was quoted to have said, “I don't see any possibility for a rise in home prices, especially in cities with large housing inventory, unless the government pushes out another few trillion (in stimulus)." Mao noted that “China has reached its capacity limit for new construction of housing projects, only some coastal third- and fourth-tier cities have potential for capacity expansion”. Vanke, headquartered in Shenzhen, is the largest residential real estate developer in the PRC, and operates across 20 cities in the Pearl River Delta, Yangtze River Delta and Bohai-Rim region. China home sales fell 7.7% in 1Q14, and analysts see further weakness ahead. The sector overhang may cast a pall over the S’pore property developers with exposure in China. Key names include: CapitaLand, CapitaMalls Asia, Keppel Land, and Ho Bee. Sentiment may be even more negative for the SGX-listed China developers: Yanlord, Ying Li, China New Town, Weiye, Pan Hong, China Yuanbang, and Debao Property.