Photo: (AP Photo/Muhammed Muheisen)
China’s retail sales growth has slowed as the country’s economic slowdown continues.The Chinese Beige Book showed that companies are cutting jobs and stopping new hires all of which is likely to impact spending.
A consensus has emerged among policymakers to lower home prices by increasing the supply of homes. And it appears that developers are racing to acquire land.
Societe Generale’s Kenny Wu visited Beijing to collect some anecdotal evidence on what’s going on in China. And returned he with these notes on the property market and retail sector:
- China’s housing market has been recovering since May and “positive sales momentum could continue into October”.
- Developers want to acquire land in prime locations. “A new high bid price (“Land King”) could emerge in Beijing in the near future, boosting market confidence.”
- The property restrictions enforced in Beijing have been working and there is a concern about oversupply of high rises in Beijing’s suburbs and in other cities. This could impact prices except in downtown Beijing.
- “Sales volume for high-quality projects in tier-I and tier-II cities should rise and as a result more tier-I developers are likely to accelerate the replenishment of their land banks in an effort to gain market share.”
- Same store sales are not expected to recover in the fourth quarter or in the first half of 2013. Most retailers have slowed new product launches. Gold and jewelry sales have however been strong.
- There is an oversupply of shopping malls because of the presence of non-commercial property developers in the retail sector.
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