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报告摘要

China Property Weekly Digest Summary (Issue No. 81)

Core Content Overview

This report provides an analysis of the Chinese property market as of June 10, 2014, focusing on sales performance, policy updates, and key projects. It highlights the market's response to regulatory changes, the performance of different-tier cities, and the outlook for the sector.

Main Points and Key Information

Project of the Week: Sino Ocean - Ocean Palace, Beijing

Project Overview: The third phase of Ocean Palace, located near the 5th-ring road in Beijing, was launched on May 18.
Unit Types: Includes townhouses, villas, and fitted apartments.
Unit Sizes: Ranges from 160 to 560 square meters.
Target Sales: Sino Ocean aims for Rmb3bn in sales for 2014, compared to Rmb1bn in 2012 and Rmb2bn in 2013.
Current Sales: Rmb1bn in sales locked in as of May.
ASP: Rmb35k-39k per square meter, similar to nearby projects and has been flat for the past six months.
Profit Margins: Expected gross margin of 27% and net margin of 14% assuming an ASP of Rmb35k per square meter.

Policy Update

Price Control Enforcement: Local governments have reiterated strict enforcement of property price controls.
- Foshan: Transactions with ASPs deviating by more than 10% from the original price (based on pre-sales permit) are not allowed.
- Hangzhou, Dongguan, Shenzhen: Transactions with ASPs deviating by more than 15% from the original price are disallowed.
Policy Loosening: Some cities are relaxing policies to support the property sector.
- Wuhan: Subsidizes interest payments for second home buyers.
- Xuancheng: Loosened HPF mortgage requirements and offered subsidies on deed tax.
- Yangzhou, Shenyang, Shangqiu, Tongling, Chengdu: Adjusted HPF mortgage policies to increase accessibility and affordability.
- Nanning: Allows residents from five nearby cities to purchase property within the city.
- Hangzhou Xiaoshan: Offers a 2% subsidy for relocation home buyers.

Sales Performance

Overall Sales: Sales slowed week-on-week but remained above the previous month's average.
Tier I Cities:
- 9 projects launched, totaling 1,705 units, with an average sell-through rate of 71%.
- Sales volumes dropped by 24% in major Tier I cities and 26% in Tier II cities.
- ASPs edged down by 1% in Tier I and Tier II cities, but rose by 4% in Tier III cities.
Tier II Cities:
- 20 projects launched, totaling 4,132 units, with an average sell-through rate of 49%.
- Sales volumes and ASPs showed varied trends across different cities.
Tier III Cities:
- 20 projects launched, with mixed performance.
- ASPs showed a slight increase in some cities, while others saw a decline.
Year-on-Year Sales:
- Sales volume for the 51 tracked cities fell by 18% year-on-year in the first 23 weeks of 2014.

Market Valuation and Outlook

Valuation: The property sector is trading at 5.4x FY14 PE and 0.7x P/BV, which are higher than the 2011 lows of 4x and 0.5x respectively.
PBOC Action: The PBOC selectively cut RRR by 50bps to support rural bank liquidity.
Recommendation: The report recommends selectively adding positions in the property sector, with a preference for COLI (688 HK), COGO (81 HK), Country Garden (2007 HK), and Shimao (813 HK).

Key Trends

Price Control: Tightened price control policies are in place to prevent sharp price drops.
Market Response: Sales slowed in Tier I and Tier II cities, but some Tier III cities showed increased ASPs.
Inventory Levels: Inventory levels across major cities indicate a long time to sell, with some cities taking over 150 weeks.
Policy Impact: Local policy loosening is expected to support the sector, especially for first-time homebuyers and developers.

Summary Table

Tier	Cities	Sales Volume (w-o-w)	ASP (w-o-w)	Sell-through Rate
I	Beijing, Shanghai, Shenzhen, Guangzhou	-25%/-32%/-17%/-2%	-1%/-15%/-3%/-8%	71% / 49%
II	Tianjin, Hangzhou, Suzhou, Xiamen, Changsha, Ningbo, Wuhan, Chengdu, Chongqing, Qingdao, Nanjing, Fuzhou, Nanning, Hefei, Shijiazhuang, Changchun, Harbin, Haikou	-74%/-53%/-43%/-3%/-74%/-38%/-40%/-26%/-25%/-53%/-23%/-36%/-24%/-26%/-24%/-32%/-23%/-13%/-15%	-25%/-3%/-8%/-14%/-14%/-18%/-22%/-3%/-24%/-10%/-4%/-4%/-18%/-31%/-10%/-23%/-20%/-1%/-4%	Varies
III	Dongguan, Baotou, Guilin, Xuzhou, Bengbu, Shantou, Zhongshan, Dandong, Jiujiang, Shaoguan, Luzhou, Nanchong, Zhoushan, Dongying, Huaian, Wuhu, Gu'an, Jiaozuo, Zhaoqing	-33%/-24%/-49%/-18%/-24%/-37%/-31%/-34%/-24%/-36%/-37%/-5%/-34%/-28%/-37%/-5%/-34%/-31%/-24%	-2%/-1%/-49%/-18%/-24%/-38%/-1%/-28%/-11%/-34%/-10%/-6%/-22%/-31%/-59%/-5%/-10%/-31%/-24%	Varies

Inventory Digest Time

City	Inventory (000 sm)	Weeks to Digest
Beijing	9,294	79
Shanghai	10,720	43
Shenzhen	3,202	65
Guangzhou	8,664	57
Hangzhou	7,722	158
Suzhou	8,169	59
Ningbo	12,885	153
Qingdao	16,686	135
Nanjing	4,959	43
Fuzhou	3,471	112
Nanning	5,747	47
Huizhou	2,437	61
Jiujiang	2,020	65
Nanchong	4,659	73
Zhoushan	2,040	171
Average	-	88

Conclusion

The Chinese property market faces a mix of challenges and opportunities in June 2014. While price controls are tightening in some cities, others are easing policies to support the sector. Developers are advised to adjust strategies accordingly, with a focus on maintaining quality and leveraging local policy support. The report recommends selective investment in the sector, with a focus on specific developers and cities showing potential for growth and stability.

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