China Property Market Suffers from Slowing Investment

Despite improving property sales bolstered by accommodative government policies, developers remain pessimistic in China, holding off on new projects and land acquisitions

Morningstar Equity Analysts 1 December, 2015 | 1:05PM
Facebook Twitter LinkedIn

Based on the latest data from the National Bureau of Statistics year-through-October real estate investment was up 2% year on year, the slowest rate since February 2009. Investment in residential buildings, accounting for two thirds of the real estate investment, was up 1.3% year on year. Similarly, gross floor area under construction was up 2.3% year on year, with residential gross floor area under construction up slightly by 0.2% year on year. The continuing slowdown in real estate investment was more evident for leading indicators.

Gross floor area starts were down 13.9% year on year, and land sales were down 33.8% year on year by volume and 25.2% by value. Given the magnitude of the slowdown, we expect the weakness in construction and real estate investment to remain well into 2016.

Graph showing how investment in Chinese real estate has fallen over the past two years

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Morningstar Equity Analysts  Morningstar stock and fund analysts cover 2,000 mutual funds, 2,100 equities, and 300 exchange-traded funds.