Real Estate Relief Coming With Foshan Reversal 佛山放宽限购政策的启示
There’s an interesting bit of news today that indicates relief may be in sight for some real estate companies, now suffering through the most sluggish property market since Beijing reintroduced private property ownership in the 1990s. But the latest move, which has seen the mid-sized city of Foshan roll back some of its most drastic real estate restrictions, probably reflects recent financial distress being felt by local governments rather than any desire by Beijing to help a real estate sector that looks more like a gambling casino than a true property market. According to a report in the China Daily, Foshan, a smaller city near Guangdong’s provincial capital Guangzhou, has eased restrictions rolled out last year under orders from Beijing that forbade local families from buying more than one home. It also eased selling restrictions, saying owners could sell their homes if they had owned them for 5 years or more. (English article) Foshan most likely would only take this kind of step with Beijing’s approval, and I expect we’ll see similar moves from other second- and third-tier cities in the next month or two. Unlike top tier cities like Beijing and Shanghai, these smaller cities are especially dependent on land sales for their revenues, and clearly they need those revenues to avoid defaulting on the numerous infrastructure and other loans they took out at the height of the global financial crisis under directives from Beijing to boost spending to prop up the economy. Having to choose between inflation and a massive wave of defaults on local government loans, Beijing seems more willing to accept the former, at least in its smaller cities. All this should spell good news for real estate services firms like E-House (NYSE: EJ), Soufun (NYSE: SFUN) and China Real Estate Investment Corp (Nasdaq: CRIC), which derive much of their revenue from activity in the market rather than actual real estate prices. Real estate developers with a greater presence in these smaller markets should also benefit, though easing measures in top tier cities are probably still at least a year or two away.
Bottom line: A new easing of real estate restrictions in a mid-sized Guangdong city indicates Beijing is moderating its tight property policies, providing relief for real estate services firms.
Related postings 相关文章:
◙ E-House: Don’t Sell the House Just Yet 易居：不要马上卖掉这栋楼
◙ Real Estate: Soaring Growth to Stall on Market Pause
