20131112-DBS_Group-China_Property_Weekly_Digest_43页_944kb

China Property Weekly Digest Summary (Issue No. 54)

Core Content

This report provides an overview of the Chinese property market as of 12 November 2013, highlighting key developments in property projects, policy updates, sales performance, and inventory levels across Tier I, II, and III cities.

Project of the Week

• Project: Greentown - Francais Demeure Shanghai (Joint Venture with Sunac and Poly CN)
• Location: Sunland area, close to Shanghai Free Trade Zone
• Land Cost: Rmb16.1k/sm (acquired from Waigaoqiao FTZ Dev in October 2013)
• Planned GFA: 173,000 sm
• Saleable GFA: 112,000 sm
• Project Launch: 26 October 2013
• Unit Sizes:
  • Apartment: 100-140 sm
  • Plain Villa: 180-230 sm
• ASP:
  • Apartment: Rmb45k/sm
  • Plain Villa: Rmb45k-50k/sm
• Sales Performance:
  • 90 units sold on the first day, generating Rmb1bn in presales
  • 2013 sales target: Rmb2.5bn
• YTD Sales: Rmb1.0bn (40% of target)
• Expected Gross Margin / Net Margin: 33% / 15%
• Sales Outlook: Local sales personnel expect ASP to rise in 2014 due to limited supply in the area

Policy Update

• Shanghai: Implemented seven cooling measures, including:
  • Increased down payment for second home purchases to 70%
  • Required non-local households to prove 24 months of residence over three years
  • Raised land supply target to 30% above the average of the past five years
• Shenzhen: Raised down payment requirement for second home purchases to 70%
• Beijing: Introduced self-use commodity housing at 30% discount to market price
• Chengdu: Tightened HPF policies, including:
  • Cap on mortgage loan at 20 times outstanding account balance
  • Prohibited buyers with GFA >144sm from applying for HPF loans for second homes
• Guangyuan: Raised mortgage cap for second home purchases
• National Policy:
  • Ministry of Housing announced action plan for residential property industrialisation, expected to be issued in 2014
  • 20 cities will be selected for trials by 2015
  • Property tax may be introduced nationwide after the Third Plenary Session, starting in 2015

Weekly Sales Performance

Tier I Cities

• Total Units Launched: 2,462
• Average Sale-through Rate: 63%
• Sales Volume Growth:
  • Tier I: +6%
  • Tier II: -8%
  • Tier III: +4%
• ASP Growth:
  • Tier I: +6%
  • Tier II: +1%
  • Tier III: -2%
• YTD Sales Growth:
  • Tier I: +17%
  • Tier II: +27%
  • Tier III: +42%

Tier II Cities

• Total Units Launched: 3,942
• Average Sale-through Rate: 61%
• Sales Volume Growth:
  • Tier I: +6%
  • Tier II: -8%
  • Tier III: +4%
• ASP Growth:
  • Tier I: +6%
  • Tier II: +1%
  • Tier III: -2%

Tier III Cities

• Total Units Launched: 66 (average)
• Average Sale-through Rate: 4%
• Sales Volume Growth:
  • Tier I: +6%
  • Tier II: -8%
  • Tier III: +4%
• ASP Growth:
  • Tier I: +6%
  • Tier II: +1%
  • Tier III: -2%

Inventory Level

• Inventory (000 sm):
  • Beijing: 7,198
  • Shanghai: 9,919
  • Shenzhen: 3,375
  • Guangzhou: 6,835
  • Hangzhou: 6,680
  • Suzhou: 6,273
  • Ningbo: 10,225
  • Qingdao: 13,549
  • Nanjing: 4,347
  • Fuzhou: 2,078
  • Nanning: 5,528
  • Huizhou: 2,254
  • Jiujiang: 1,458
  • Nanchong: 3,835
  • Zhoushan: 1,763
• Average Weeks to Digest Inventory: 44 weeks

Key Developers and Investment Recommendation

• Top Picks: COLI, CR Land, COGO, Franshion
• Sector Valuation:
  • FY14 PE: 6.2x
  • P/BV: 0.9x
  • Discount to NAV: 50%
• Historical Averages:
  • PE: 10x
  • P/BV: 1.2x
  • NAV: 37%

Market Outlook

• The property sector is expected to face continued policy uncertainties due to rising ASPs in Tier I cities.
• The government is maintaining a tightening stance, particularly in Tier I cities, before the Third Plenary Session.
• Investors are advised to focus on developers with strong fundamentals and sustainability.

Key Takeaways

• Greentown's Project: Shows strong initial sales performance and is expected to achieve its 2013 sales target.
• Cooling Measures: Implemented in multiple cities, including increased down payments and land supply adjustments.
• Sales Trends: ASPs continue to rise in Tier I cities, while sales volumes show mixed performance.
• Inventory Trends: Inventory levels are high in some cities, indicating potential for slower growth in 2014.
• Investment Focus: Emphasis on reputable developers due to sector valuation discounts and policy uncertainties.