Investment slows amid cooling Chinese property market

(Xinhua) Updated: 2014-07-07 10:02

BEIJING - The cooling real estate market in China greatly dampened property developers' willingness to expand investment in the first half of the year, a market analyst has said.

The withering enthusiasm was reflected by a sharp slowdown in investment growth and in particular, a plunge in the number of new projects launched, said Meng Yin, vice secretary-general of the China Real Estate Research Association Market Committee.

Combined with the falling property sales, it is predicted that investment in the sector will remain sluggish in the next few months, Meng said in an article in the latest edition of Beijing-published Caijing Magazine.

She said that property investment from developers grew 16.4 percent year on year in the Jan-April period, with the growth rate down by 3.4 percentage points from a year ago. Government data showed investment in Jan-May further slowed to 14.7 percent.

Meanwhile, Meng said that new projects launched during Jan-April stood at 430 million square meters, down 22.1 percent year on year in terms of floor space. Newly launched projects in Jan-May plunged 18.6 percent year on year.

The slowing investment came as property sales fell 7.8 percent in the first five months of the year, with the decline widening by 0.9 percentage points compared to the first four months, according to government data.

Meng said that the Chinese property market had witnessed adjustments almost every three years since 2005. Unlike on those occasions, however, the adjustment in 2014 was largely brought about by the market itself, influenced by supply and demand, and prices, she said.

Faced with the new situation, she said that property developers may be forced to adopt more discreet development strategies in opposition of rampant investment and high liabilities. They may also seek to diversify their businesses to hedge against potential risks.