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REPEAT: China Property Investment Lowest Growth Rate This Yr

Repeats Story Initially Transmitted at 05:02 GMT Aug 14/01:02 EST Aug 14
     BEIJING (MNI) - China property investment growth cooled in July, with the
year-to-date growth rate slowing to the lowest so far this year, according to
data released by the National Bureau of Statistics on Monday.
     Property investment grew 7.9% year-on-year to CNY5.9761 trillion in the
January to July period, with the growth rate down from 8.5% in the first six
months. 
     Investment in residential property, which comprises 68.1% of overall
property investment, grew 10.0%, down from 10.2% in the January-June period.
     The narrowing growth rate was due to increasing difficulty property
developers are having obtaining needed funds as market liquidity has tightened
recently, Yan Yuejin, director of the research department at E-house, a New York
Stock-listed property information and service provider based in Shanghai, said
in a note Monday.
     "But the growth rate is still more than 5%, so from this perspective the
investment performance is still good," Yan argued.
     Housing starts grew 8.0% to 10.0371 trillion square meters in the
January-July period, well below the rates of 10.6% in January-June period and
9.5% in January to May.
     "The peak of investment in the property market may have passed," China
Industrial Bank Research commented in a note.  
     Property developers acquired 1.2410 trillion square meters of land in the
first seven months, up 11.1% from the same period last year and  2.3 percentage
points higher than in January-June. Land transactions rose significantly, up 41%
higher y/y and 2.5 percentage points higher than in the first six months. 
     "It shows that currently property companies are still very active in buying
land," Yan said. "One big driver is they are having better land acquisition
opportunities." 
     Some local governments are speeding up land sales, Yan told MNI.
     On the other hand, both property sales and revenue decelerated in July.
Sales rose 14% y/y to 863.51 million square meters in the first seven months,
down from 16.1% growth in January-June. Sales growth dropped in all property
categories in January-July vs January-June: residential property sales 11.5% vs
13.5%; office buildings 33.7% vs 38.8%; and property units for business
operations 29.4% vs 32.5%.
     The slowing of sales growth reflects the continued impact of local
government measures to rein in rising housing prices. Since last year, the local
Chinese governments have tightened controls on the sector, issuing new policies
including: limiting the number of houses a family can buy; increasing the wait
time after purchase before a property unit can be put back onto the market;
requiring higher down-payments; and, recently, requiring banks to raise mortgage
interest rates.
     The sales drop is more obvious in larger Tier-1 and Tier-2 cities and shows
China's efforts in deleverage and removing bubble in the property sector are
paying off, Yan noted.
     Property sector revenue grew 18.9% to CNY6.8461 trillion, with the growth
rate down 2.6 percentage points from 21.5% in January-June.
     Inventories of unsold properties have improved amid the government's
campaign to cut excess inventories since mid-March. Total inventories dropped
10.81 million square meters to 634.96 million square meters in July, compared
with the 645.77 million in June.
     The overall inventory decline was due to lower stocks of unsold residential
properties. In contrast, the inventory of unsold office buildings rose 10,000
square meters in the first seven months, compared with the 0.6 million square
meters drop recorded in January-June. The decline in inventories of property
units for business operations slowed, dropping 0.64 million square meters
compared with the 1.28 million square meters decline in January-June.
     Funding for property developers rose 9.7% to CNY8.7664 trillion
year-to-date in July, 1.5 percentage points lower than that in the first six
months.
     This reflects the continuing tightening of funding available for property
development, which, in turn, related overall tightened of credit policies for
the property sector, forcing developers to find new financing channels, Yan
said.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com
--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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