China Archives - Amora Escapes

China Must Rethink Its Reliance on Property Sales to See Real Growth

Aaron Maxwell — Wed, 31 Jul 2024 14:06:15 +0000

The small eastern city of Zibo in Shandong province is experiencing an outdoor barbecue craze.

People from all over China are coming here to taste its lamb skewers, which have become legendary via social media.

It’s quite a raucous experience and certainly not for the faint-hearted.

The street is packed, you sit on little plastic chairs, drink beer and wrap chunks of meat with spring onion on the local flatbread while karaoke songs pump out in all directions.

On the face of it, these crowds appear to show an economy rebounding strongly from the coronavirus emergency – but according to economists that’s not the case.

Rather, they say, this is an example of people choosing a cheap, tasty, option at a time of great pressure on household incomes.

Zibo attracts people from all over China, who come for the lamb skewers and karaoke

A man sitting with his shirt off tells us this is the perfect spot to enjoy a hot summer night with his family, and that this type of fun has a price tag to match the moment.

“This place is great for ordinary people,” he says. “Recently, it’s been hard to make money but still easy to spend it. After three years of Covid, the economy is only slowly recovering.”

University graduates are being hit especially hard by China’s economic doldrums, with youth unemployment hovering at or above 20%.

Some students are feeling nervous about their futures.

“Yes, I’m worried,” says one woman who’ll soon graduate. “There’s a lot of competition. It’s hard to find a job. All my classmates feel the same pressure.”

For those who have jobs, a big reason for their reluctance to spend big is economic security.

They’re concerned about the potential to join the ranks of the unemployed, and their household’s largest single investment is, in many cases, no longer worth what they thought it would be.

The real estate sector is under great stress in China.

New residential blocks in Qingdao sit unfinished or barely occupied

To see this first-hand, we drive a few hours east of Zibo to the outskirts of a much larger city, Qingdao.

Here, a property explosion hasn’t matched real demand from buyers or renters, and the result has been huge housing estates built with very few residents in them.

A woman is selling cold noodles from a portable stand outside her housing complex where she has few neighbours.

A few years ago, her husband bought a flat here after moving to Qingdao to give their child a better start because they heard the schools would be good.

I ask her if she’s worried about the value of her home collapsing.

“Of course I’m worried,” she says. “But what can I do?”

Nearby a couple who are street cleaners have stopped for lunch. They point to the huge estate behind them and say that nobody lives there.

Across the road there is a small forest of concrete towers without paint, without windows and with window frames now looking the worse for wear, having been exposed to the elements.

The property explosion in Qingdao has outpaced demand from buyers and renters

“Construction just stopped there one day last year,” the man says.

According to his wife, the entire suburb is pretty dead. “There’s nothing here. There’s no petrol station. You have to go a long way for fuel. It’s really not convenient to live here,” she says.

There had been hope that this region would take off after the city hosted a major political meeting, the Shanghai Co-operation Organisation Summit, and China’s leader Xi Jinping gave it his personal stamp of approval as a place to invest and do business, potentially hosting international expos and the like.

But the factories, start-ups and other companies that would supposedly employ those who bought property here have been few.

According to a local real estate agent, sales volumes have halved in the area in recent years.

“Prices are down because the market is saturated,” she says. “Too many homes were built and it’s hard to sell them.”

We put up a drone to get a bird’s eye view and it looks even worse than at ground level.

Entire new housing estates where work has stopped can be found in all directions. Those that are finished don’t have much sign of life in them.

A boom in real estate in China has pushed city house prices out of reach for many families

What’s more, this supply and demand problem isn’t unique to this area. It isn’t even unique to this city. In province after province across China, evidence pointing to the danger of a property bubble is easy to find.

One reason for rampant real estate speculation in this country has been a lack of other options for investment. But the boom in real estate drove house prices out of the reach of ordinary families in many big cities. The government response was to cap the number of flats any person could buy.

It was a genuine attempt at an egalitarian reform, but pressure is now coming to reverse this. In Qingdao, such measures have already been eased, in an attempt to stimulate its stalled real estate market.

The challenge for Chinese policymakers is to find a way to wean this economy off such a heavy reliance on property sales to generate growth and business confidence.

Economists like Harry Murphy Cruise, from Moody’s Analytics, think China is facing significant problems.

“China’s economy is in desperate need of rebalancing,” he tells the BBC from Australia. “It’s had that massive period of growth over the last two or three decades from big infrastructure building, from a massive uptick in the property market that is actually not a sustainable growth driver going forward.

“Look around the world, developed economies need households as a key driver of economic growth, and that is just not what China has at the moment.”

The Chinese government is considering ways to promote more spending by individuals and by businesses from interest rate cuts to cash handouts.

But the problem is sentiment.

People will feel more secure when there are more jobs. Businesses need to invest to create more jobs, but they are reluctant to do so while customers are so insecure.

As Harry Murphy Cruise puts it: “It’s sort of like the chicken and the egg. You can’t have that uptick in the economy unless you have business spending. They’re not spending until they see that uptick. So, there’s a stalemate that’s really holding back a key portion of the economy.”

Then there’s the chance that all of this will bleed into global trade.

Meanwhile, tourism along Qingdao’s famous coastline appears to be picking up

China is big. What happens to the world’s second largest economy turns ripples into waves.

Reduced manufacturing here – off the back of weak international demand – has resulted in fewer exports, fewer Chinese-made goods available worldwide and less business activity in Asia’s mega factory. Then the subsequent slower consumption in China means fewer imports of other countries’ products.

The headache for the Chinese government is that it may have to choose whether to go for a short-term stimulus fix, which would delay the rebalancing it will eventually need to face, or whether to absorb more immediate pain and bring on the long-term solution more quickly.

Naturally, there are almost certainly those in Beijing’s upper echelons of power considering some sort of middle path, starting with a milder boost to stabilise the economy, then considering the larger problems at hand.

Because they know that, once negative sentiment sets in, it can be hard to turn around.

Yet if you want to feel optimistic about Qingdao, and about life, you go to the beach. Tourism along its famous coastline does seem to be picking up.

There’s laughter, sandcastle construction and everyone – whether they’re a captain of industry or a truck driver – is enjoying the great embrace of the ocean.

Whether it matches reality or not, here you almost can’t help but feel that, despite everything, the future still has good things in store.

Source : BBC

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Yanlord Reports 26.1 Billion Yuan in Property Presales for First 9 Months of 2023

Julian Berry — Wed, 31 Jul 2024 14:05:31 +0000

CHINESE property developer Yanlord Land Group recorded 26.1 billion yuan (S$4.8 billion) in total contracted presales from residential units, commercial units and car parks for the first nine months of the year.

The presales were for a contracted gross floor area of about 1.02 million square metres (sq m) and were 51.7 per cent lower than presales for the year ago period, the group said in a bourse filing on Tuesday (Oct 10).

Presales include those by the group, its joint ventures and associates.

Yanlord Land’s total contracted presales for September was down by 83.2 per cent to 1.6 billion yuan for a contracted gross floor area of 67,835 sq m.

In its unaudited key operating figures for the nine months ended Sep 30, Yanlord Land said it has approximately 2.6 billion yuan of subscription sales, which are expected to be turned into contracted presales in the coming months.

Five cities in China – Nanjing, Suzhou, Shenzhen, Jinan and Tianjin – accounted for about 59.5 per cent of total contracted presales for the first nine months of the year.

For the first six months of 2023, Yanlord Land posted a net profit of approximately one billion yuan for the half year ended June 2023, down 20 per cent from the 1.4 billion yuan a year ago.

Property prices in China have slumped amid worsening business sentiment as property giants Country Garden face potential debt default and Evergrande Group aims to restructure US$22.7 billion of offshore debt.

Source : TheBusinessTimes

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Property Woes Loom Large Over China’s 2024 Outlook: Economist

Victor Lyons — Sun, 31 Dec 2023 01:13:09 +0000

Sustained property woes will continue to be the biggest drag on the world’s second-largest economy next year, with potential buyers hesitant to purchase and developers struggling for cash, according to a prominent economist.

“The real estate sector does show some signs of stabilising, but has it bottomed out? I don’t think we can make such a conclusion right away,” Lu Ting, chief China economist at Japanese investment bank Nomura, said in Beijing on Saturday.

Lu said that with delayed delivery of roughly 20 million presold homes – mostly in lower-tier cities where many private developers have been ensnared – there was a “negative feedback loop” between a public reluctance to buy new homes and a lack of cash among developers to build homes.

It also led to lower income for local governments, which rely heavily on land sales revenue, which in turn meant pay cuts for public sector workers and further drop in new home purchases, he added.

“Without cleaning up the mess [from undelivered presold homes], the real recovery of the property sector still faces a huge obstacle,” Lu said.

Beijing has implemented a series of stimulus measures to prevent the property market from further falls in the second half of the year, but sales have remained sluggish and prices dropped.

Without power from the traditional growth engine, some emerging economic drivers might also come to a standstill in 2024, including the investment boom in the new energy sector and the pent-up demand in the domestic service sector, Lu said.

“The rebound of consumption in the travel and catering sectors may slow down notably, because of the fading of a low base,” he said.

Investment in green energy industrial chains such as solar panels and electric vehicles – which were among the few export bright spots this year – might slow due to overcapacity and rising trade barriers in key overseas markets such as Europe, Lu added.

And weakening external demand as well as lasting geopolitical tensions would further weigh on China’s export sector and foreign investment, he said.

Despite the worsening global slowdown, falling yields in developed economies and a weaker dollar could give Beijing more space to ramp up its fiscal spending, with funding either from markets or its own central bank, according to Lu.

“Weak external demand also limits inflation and leaves more room for the [People’s Bank of China’s] money-printing, which might be essential for rescuing many projects left unfinished by developers,” he said.

He added that neither commercial banks nor local governments had the ability to put an end to the property crisis.

To save the economy, “first, the real estate sector is critical. Second delivery of presold homes is critical. Third, it should be financed by the central government.”

Source : SCMP

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Country Garden’s Chair Says Confident in Repairing Balance Sheet

Tyrone Santiago — Sat, 30 Dec 2023 01:06:31 +0000

(Bloomberg) — Country Garden Holdings Co.’s Chair Yang Huiyan says she is “very confident” the company can repair its balance sheet and pledged the founding family’s support for the ailing Chinese property giant.

The path to fix the balance sheet is “very clear and can be achieved,” Yang said at a monthly management meeting held Friday, according to a statement on the developer’s WeChat account. Country Garden “will strive to become a model for the quick recovery” of distressed companies, she added.

Country Garden’s debt struggles have epitomized the property crisis engulfing the country’s economy. The remarks come as China introduces new measures to put a floor under a property market that’s been roiled since the introduction of measures three years ago aimed at cutting the industry’s reliance on debt.

The developer, a poster child of China’s property crisis, defaulted in October for the first time on dollar bonds, and will face a test next week to avoid the same fate on a local note — an outcome that a regulator signaled it’s trying to avoid.

Yang said that Country Garden can maintain “positive assets” for the next ten years “as long as our inventory assets are sold normally.”

Separately, the company said in the statement that it will have three tasks over the next 12 months: ensuring delivery, operation, and credit and it expects to deliver more than 400,000 units in 2024.

Source : BNNBloomberg

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Wealthy Chinese Firms Go Bargain Hunting in China’s Stagnant Property Market

Rick Casey — Sat, 23 Dec 2023 12:21:24 +0000

(Yicai) Dec. 6 — A number of cash-rich Chinese distillers and coal miners have started to buy up land and properties in the country amid a sluggish real estate market.

An affiliate of liquor maker Jingpai paid CNY3.5 billion (USD490 million) for a sought-after land plot in Suzhou, eastern Jiangsu province, in October at a premium rate of 15 percent. The company has bought up a lot of property in Nanjing and Suzhou this year and is cooperating with real estate developers to let it operate them.

And coal miner Inner Mongolia Manshi Coal Group splashed out CNY4.1 billion (USD575.8 million) on three luxury apartment buildings in Shanghai. Two other coal producers, Erdos Group and Huineng Group, also recently spent CNY2.6 billion and CNY6.2 billion, respectively, on property in Shanghai.

Now is the time to pick up bargains as the real estate market is still stagnant and there are stimulus policies that should soon take effect, Zhang Hongwei, founder of Jingjian Consulting, told Yicai. Companies with deep pockets can buy up properties with a long-term view. They should look for prime properties in good locations that have a low price, he added.

Whether it is time to bargain hunt or not depends on the situation and it is still necessary to pay attention to market and policy risks when getting involved in real estate because of the volatile nature of the market, said Bai Wenxi, chief economist of IPG China.

Real estate is a capital-intensive industry with a lack of liquidity so investors need to carefully weigh up the pros and cons before they make a decision, he said.

Source : YiCaiGlobal

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China’s Unfinished Property Projects Are 20 Times the Size of Country Garden

Rick Casey — Thu, 21 Dec 2023 03:35:09 +0000

BEIJING — The size of unfinished, pre-sold homes in China is about 20 times the size of property developer Country Garden as of the end of 2022, according to a Nomura report on Wednesday.

Country Garden has been the largest non-state-owned developer in China by sales. It ran into financing troubles this year, and defaulted on a U.S. dollar bond last month, according to Bloomberg News.

“We estimate that there are around 20 million units of unconstructed and delayed pre-sold homes,” said Nomura’s Chief China Economist Ting Lu and a team.

About 3.2 trillion yuan ($440 billion) is needed to complete those remaining units, according to the analysts’ estimates.

Apartments in China are typically sold ahead of completion. Ensuring construction of the homes has been a government priority since delays make people less willing to buy new apartments.

At some point next year, the issue of home delivery could turn into a social issue and endanger social stability, and Beijing may eventually need to significantly ramp up policy support.

Nomura

“In our view, amid the collapsing property sector and widespread credit fallout among property developers, home buyers might get increasingly impatient while waiting for the delivery of their purchased new homes,” the Nomura report said.

“At some point next year, the issue of home delivery could turn into a social issue and endanger social stability, and Beijing may eventually need to significantly ramp up policy support,” the analysts said. “We see this as the key to truly restoring the confidence in the property sector and economy.”

Last year, many homebuyers in China decided not to pay their mortgages on property purchases due to long delays in construction. Developers have faced a financing crunch since Beijing’s crackdown in 2020 on their high reliance on debt. Covid-19 restrictions last year also made construction difficult.

“Assuming 20% volume growth in new home completions for the current year, developers will only manage to deliver 48% of the homes pre-sold between 2015 and 2020, leaving 52% still subject to delays,” the Nomura analysts said.

Source : CNBC

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China Pushes State Banks to Accelerate Funding for Private Property Developers

Billy Day — Mon, 11 Dec 2023 01:20:07 +0000

Chinese authorities are putting pressure on state banks to accelerate lending to private property developers, as they strengthen efforts to revive the country’s debt-stricken real estate market by supporting some of its biggest and most precarious companies.

Chinese regulators have instructed state banks to ensure the amount of loans to private property developers at least match the sector-wide average, according to two people who attended a gathering in Beijing on Friday of senior government and banking officials.

Shares of private developers jumped on Tuesday. The companies, which lack the support of their state-backed rivals, have been at the heart of a crisis in China’s property sector, which previously accounted for more than a quarter of economic activity in the country.

A barrage of defaults at private developers, led by Evergrande, the world’s most indebted property company, in 2021, has shaken confidence in China’s economy, leaving creditors to chase unpaid debts and real estate projects to sit unfinished across the country.

The unfolding funding crisis has pushed Country Garden, once China’s biggest private developer by sales and long thought of as more financially stable than its peers, into bond default this year.

“These new measures reflect concerns of policymakers on the credit risk of private developers,” said Larry Hu, chief China economist at Macquarie. “It would boost the short-term market sentiment for sure,” he added, while cautioning that “what commercial banks can do is limited”, pointing to the lack of success of previous support packages.

At the meeting on Friday, regulators also told state lenders to issue mortgages to home buyers purchasing property from private developers at least at the same pace as they issue mortgages to buyers from all developers.

The latest moves, conveyed to banks in person by representatives from the People’s Bank of China, the Central Financial Commission, the National Administration of Financial Regulation and the China Securities Regulatory Commission, illustrated authorities’ urgent concern about arresting the downward spiral in the property sector.

Regulators also pledged on Friday to consider unwinding some restrictions, such as caps on bank loans for mergers of developers.

Previous piecemeal support measures have failed to reverse the slowdown. A flagship $27bn PBoC bailout scheme has disbursed only about 3 per cent of its funds after state lenders could not find creditworthy developers.

At the Friday gathering, China’s biggest banks, brokerages and distressed asset managers were directed to meet property developers’ funding needs to a “reasonable” degree, according to an official readout.

The People’s Bank of China, NAFR and CSRC did not immediately respond to requests for comment.

Shares in Chinese property developers gained on Tuesday, with the Hang Seng Mainland Properties index, which tracks Hong Kong-listed Chinese developers, rising 2.9 per cent, well ahead of a 0.6 per cent increase for the broader Hang Seng benchmark.

Shares in developer Sunac China leapt 19 per cent after disclosing on Tuesday that it had begun implementing a $10bn debt restructuring. Country Garden climbed 7.8 per cent and Longfor Group rose 5.8 per cent, while China Vanke and China Overseas Land added 5 per cent and 3 per cent, respectively.

“A key thing to watch is whether and when policymakers will take bolder action, such as creating a lender or buyer of last resort for property developers,” Hu said. “If it happens, this will be the turning point for the property market.”

Source : FinancialTimes

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China’s Property Sector Needs More Government Support as Crisis Deepens

Cecil Vega — Sat, 09 Dec 2023 00:58:03 +0000

BEIJING — China’s property market, which makes up a substantial chunk of the country’s economy, needs more government support to prevent it from deteriorating further, analysts said.

Existing home prices fell in October by the most since 2014, while outstanding property loans fell for the first time in history, Larry Hu, chief economist at Macquarie, said in a note Friday.

That indicates increased drags on both the demand and the supply side.

Policy so far has focused on boosting demand. But the government hasn’t “addressed the most important issue: credit risk related to developers,” according to a Macquarie report.

“Without a lender of last resort, a self-fulfilled confidence crisis could easily happen as falling sales and rising default risks reinforce each other,” the report said. “Indeed, some large developers have recently seen their credit risks rising rapidly.”

Beijing has sought to reduce real estate developers’ high reliance on debt to fuel growth, while tamping down on a surge in home prices that has made buying an apartment in major cities prohibitively expensive for many young Chinese households.

UBS analysts estimated that real estate and related sectors now account for about 22% of China’s gross domestic product, down from around 25% levels seen in recent years.

Since November 2022, Chinese authorities have rolled out a raft of measures aimed at improving developers’ access to financing and reducing mortgage rates.

However, real estate behemoth Country Garden still ended up defaulting on a U.S. dollar bond last month, according to Bloomberg News.

On the homebuyers side, Nomura analysts last week estimated about 20 million units across China have been sold — but not yet completed.

Apartments are typically sold ahead of completion in China. Developers’ inability to finish construction on pre-sold properties prompted many homebuyers last year to stop mortgage payments on homes they had already bought but had yet to receive.

Markets ‘too optimistic’?

Recent figures indicate that property sector troubles are only worsening.

The average price for existing homes across 70 major cities fell by 0.6% in October from the prior month, compared with a 0.5% drop in September, with China’s largest cities leading declines, Nomura analysts said in a report last week citing official data.

That’s concerning since larger cities are expected to have a more sustained demand for homes due to the availability of jobs.

“China’s property sector has yet to bottom out,” the report said. “Markets appear to have been a bit too optimistic about the property stimulus policies over the past two months.”

More high-level signals

Policymakers in the last few days have made an effort to signal more support.

The People’s Bank of China late Friday announced it held a meeting with other financial regulators to allow lending to real estate developers that are “operating normally”, among other signals of support. The authorities also called for developing affordable housing, according to the readout.

“The meeting should help avoid an undesirable contraction of credit extension in the final two months of the year, as financial institutions try to time new loan deals to the new year to engineer a strong start,” Citi analysts said in a report Monday.

“The continued emphasis on supporting real estate financing and LGFV debt resolution will continue [to help] prevent risks [from] escalating,” the report said. “As fragile growth continues to call for an accommodative monetary environment, the meeting is moving along the needed direction while more supports are still needed to boost private sentiment.”

Shares of several major property companies closed higher on Monday, with developer Sunacrising 5.9% in Hong Kong trading.

Source : CNBC

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HSBC’s Quinn Says China Commercial Property Hit Lowest Point

Rick Casey — Mon, 04 Dec 2023 15:43:44 +0000

HSBC Holdings plc chief executive officer Noel Quinn said China’s commercial property sector had reached a trough, but investors shouldn’t expect a swift reversal following the recent downturn.

“The commercial real estate market in China has had a huge policy correction, and I think we are at the bottom of the market,” Quinn said on Bloomberg TV from London on Monday. “But it will take quite a while for that market to recover and regain momentum. So, I am not expecting a massive reversal in that sector in the next 12 months or so, but I do expect it to be a gradual improvement from where we are.”

Investors are concerned about banks’ exposure to China’s property market, amid developer defaults and relatively sluggish economic growth. Standard Chartered plc shares plunged last week after profit missed estimates due to charges related to investments in China, and as chief financial officer Andy Halford said it remains difficult to call the bottom for commercial real estate.

Of US$1.1 billion (RM5.24 billion) expected credit loss charges announced in HSBC’s third-quarter earnings on Monday, about US$500 million was related to the commercial real estate sector in mainland China. HSBC has charged a total of US$800 million against the China property portfolio this year.

“There remains the potential for a further deterioration in credit conditions during the last three months of the year, given the continued uncertainty around liquidity support for state-owned enterprises and ongoing weakness in property market fundamentals,” HSBC said in a statement. “Borrowers are therefore subject to a high degree of performance uncertainty and offshore refinancing risk.”

The firm pared its reliance on the sector, with its total mainland China commercial real estate exposure at US$13.6 billion, down roughly US$600 million from the second quarter, which it said was “mainly due to write-offs”.

“I’m encouraged by some of the policy measures that were announced recently,” Quinn said on Bloomberg TV. “They will take time to have effect, so I’m not expecting a rapid turnaround, but I do think we are at the bottom of the market, and will now have to have a slow recovery.”

Source : Bloomberg

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Singapore’s Keppel Looks to India Amid China’s Property Woes

Sherman Henry Reeves — Sat, 18 Nov 2023 14:03:13 +0000

SINGAPORE — Singapore asset manager Keppel is looking deeper into emerging markets like India to drive investments even as China, long a source of business, struggles with a property crisis that threatens to dampen growth for the country.

Keppel, which counts Singapore state investor Temasek as a major shareholder, will send a management team to India in November to “examine the market more closely” in order to establish a foothold.

Louis Lim, chief executive officer for Keppel’s real estate division, told Nikkei Asia in an interview that this is being done as the company aims to balance its portfolio across the region, with India “looking attractive.”

“This is a good time for India,” he said. “There’s a lot of impetus for growth across sectors, not just real estate. … We see opportunities there to grow our infrastructure and our connectivity businesses.”

In Mumbai, Keppel and Indian real estate developer Rustomjee Group in May jointly launched high-rise apartments in a project named Lavie. The condos form part of the Uptown Urbania integrated township in the city’s Thane West.

Uptown Urbania sprawls over 100 acres (40 hectares), with the Lavie project spread over 8.5 acres with eight high-rise towers. It offers amenities for residents such as a swimming pool, gymnasium, business center, yoga deck and whirlpool baths.

In China, Keppel in early October announced an agreement to divest a 35% equity stake in Chengdu Taixin Real Estate Development. This joint venture between Keppel and mainland real estate developer Vanke Enterprise owns V City, a 16.7-hectare residential project in Chengdu.

Vanke is paying out about 94 million Singapore dollars ($69 million) for Keppel’s divested stake. Keppel said the V City development was completed in 2020, and all 5,399 residential units and 356 street-front shops have been fully sold.

“In the case of the more recent Chengdu divestment, that is an amount of money that we can deploy because actually the project is almost completed,” Lim said. “In terms of the value that we’ve been able to capture, the profits have already been banked and we felt it was time to take those monies and deploy them elsewhere.”

In China, Lim noted that the property sector has been through a rout and assessed that it is unlikely that the real estate space will experience a fast recovery.

The world’s second-largest economy, after the U.S., has of late been pressured by troubles from beleaguered property developers.

For instance, China Evergrande Group, once the largest developer in the country, is struggling under heavy debts accumulated over a number of years, and a sales slump has hit its cash position following a government crackdown on the sector.

In August, Evergrande filed for bankruptcy protection in America. At the same time, Country Garden Holdings, the mainland’s largest property developer by revenue, experienced a worrying cash crunch.

The World Bank in October cut its growth forecast for China into next year as Asia’s largest economy struggles with the brewing property crisis, which has spelled bad news for its gross domestic product.

Growth is now pegged at 4.4% for 2024, down from the 4.8% figure the institution forecast in April. Oxford Economics, in an August report, noted that property-related debt accounts for at least 43% of China’s GDP by estimates.

Keppel’s Lim noted that industry watchers do not believe China will see a turnaround from its property troubles next year, with his company “hunkered down” to focus on spaces that are a priority.

“We do have a residential program for China that we will continue to invest in,” he said. “We work with the local partners to buy into attractive micro-market real estate opportunities in residential.”

Keppel has a China Urban Development Investment Programme that backs residential developments in Chinese gateway cities alongside co-investors. In 2022, through this program, Keppel invested in a residential site in Shanghai with another partner.

Lim said that Keppel has been in the Chinese market for over 30 years, and it will continue to be an important place for his company in the future, even though the real estate sector is currently laden with uncertainty.

Apart from this, the company is also eyeing opportunities in ASEAN members, including countries like Vietnam, Indonesia and Malaysia.

Diving into sustainable developments is a key aspect of Keppel’s approach, Lim highlighted, and this has been seen in a few projects that the company has within its portfolio.

International Financial Centre, located in Jakarta’s central business district, is a Keppel-developed project that comprises office space and retail outlets. The development uses energy-efficient technologies and has management systems to minimize power consumption.

Over in Vietnam, the company has a stake in Saigon Centre, a mixed-used development located along Le Loi Boulevard in Ho Chi Minh City’s central business district. The project uses energy generated from solar panels to reduce carbon emissions.

“We have demonstrated that sustainability produces financial results,” Lim said. “You may be paying more in rent, but you may be paying less in energy … [if] we are able to provide technology to help your office space run more efficiently.”

Source : NikkeiAsia

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