Further curbs prompt big developers to look abroad.
China’s largest property developer China Vanke posted a rise in full-year profit and is looking to extend its foreign investment drive beyond the high-end US market.
According to Reuter’s calculations based on the company’s full-year results published last week, Vanke’s net income rose to RMB8.87 billion (US$1.43 billion) during the July–December period from RMB6.65 billion (US$1.007 billion) a year earlier, beating analyst forecasts of RMB8.37 billion (US$1.26 billion). For the full year, its profit rose 30% to RMB12.6 billion (US$2.03 billion).
Analysts say that big Chinese developers, including Xinyuan Real Estate and Country Garden, are also looking abroad and chasing wealthy Chinese who are buying apartments in countries with sizeable Chinese migrant communities such as Malaysia and Australia, CNBC reported.
Vanke partnered with New York–based Tishman Speyer and developer of the Rockefeller Center to develop two high-rise residential condominium towers in San Francisco. ‘Of course we will not only have projects in San Francisco. We will not rule out the possibility to have long-term investment elsewhere and learn from good companies in other countries,’ said Vanke president Yu Liang in a media conference in Hong Kong.
The company’s foray into the USA came after its expansion into Hong Kong last year, where it acquired Hong Kong-listed WinsorProperties Holdings. It also opened a management office in the territory.
According to Credit Suisse analyst Jingsong Du, Chinese property developers will go anywhere mainland Chinese want to go. ‘Their target customer is mainland Chinese who want to migrate overseas, or have a home outside of the country.’
Beijing is cracking down harder on investment and speculative purchases as rising house prices have pushed affordability to all-time lows. Experts agree that the government will expand its three-year campaign period to cool its overheating property market. According to sources, the decision by mid-size lender Ping An Bank to ban its regional branches from approving mortgages signals Beijing’s intention. Also, Premier Wen Jiabao vowed this month to tackle speculation.
However, analysts said that Beijing’s curbs could benefit Vanke and other larger, most established developers in the long term. The measures will squeeze out smaller, cash-strapped developers and could help consolidate China’s fragmented property market. Indeed, the impact of the cooling measures will be relatively limited to big players such as Vanke, said Kris Li, senior analyst at SWS Research in Shanghai.