Chinese real estate markets

There’s an interesting piece in the FT on the response of Dalian Wanda Group to the downturn in the Chinese real estate market. Two points jumped out to me.

  • It suggests that the main centres of oversupply are third and fourth tier cities and the residential and office sectors specifically. Whilst they’re expecting a 39% drop in sales revenue, the effects of the downturn seem to be variable. Last month, Shenzhen’s house prices rose 57 per cent year on year.
  • The company is moving into property management and development management (executing developments on behalf of third parties). It was restricting its activity in such cities to “asset-light investment properties” — it will not own the land or real-estate assets, but merely develop and manage the projects on behalf of third-party investors. I like the phrase “asset-light”.

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