Chinese real estate stocks are soaring despite property
market fears

Firms like Sunac, Evergrande among top performers

TRD MIAMI /
Apr.April 18, 2017 10:40 AM

A view of the skyline of Pudongs Lujiazui Financial District in Shanghai (credit: Getty Images) and Evergrande’s Hui Ka Yan

From TRD New York: Chinese real estate stocks are racing ahead of their U.S. counterparts, but analysts are split over whether the rally can continue.

Chinese firms accounted for nine of the 10 best performing stocks in the Bloomberg World Real Estate Index so far this year. Firms like China Evergrande Group — which is the country’s largest homebuilder by sales and is battling for control of the country’s second largest builder, Vanke — and Sunac China saw their stock rise more than 70 percent.

Still these firms face a tougher environment now that several major Chinese cities have imposed restrictions on home purchases in a bid to cool the property market.

“Investors will be more selective in buying the stocks this year,” BNP analyst Wee Liat Lee told Bloomberg. “Large developers will gain market share from the smaller players. You need to be a very big developer with diversified exposure across different cities in China to thrive amid tougher curbs.” Debt is another issue: Both Sunac and Evergrande are highly leveraged.

Other analysts argue that even if the market slows, the continued flow of money into Hong Kong’s stock market could still drive up valuations. “Many overseas funds argued that they’re not comfortable with these aggressive firms,” Citigroup analyst Oscar Choi told Bloomberg. “But with Chinese investors rising as a new source of purchasing power, these bears don’t have too much say.”

The Chinese government won’t introduce a property tax this year, despite the belief that it would help curtail the country’s soaring home prices. Dalian Wanda Group CEO Wang Jianlin warned last September that China is now “facing the biggest bubble in history.” [Bloomberg] Konrad Putzier


Related Articles

arrow_forward_ios
Best of TRD 2019 promo

Coming soon: The Real Deal’s Best of 2019

Madison Realty Capital'a Josh Zegen and Fort Partners' Nadim Ashi  

Four Seasons in Fort Lauderdale scores $210M loan

Daily Digest Miami

Gil Dezer, Related complete Residences by Armani/Casa, hedge funder, wife drop $105M for Palm Beach estate

Daily Digest Miami

South Florida home sales struggle in October, Cipriani and Terra plan luxury condo

Rendering of Sailboat Bend II

Affordable housing project in downtown Fort Lauderdale lands $27M loan

Rendering of the Brickell hotel development, Tony Cho and Robert Finvarb

Finvarb and Cho land construction loan for mixed-use hotel near Brickell City Centre

Developer borrows $105M, breaks ground for mixed-use Flagler Village project

Developer borrows $105M, breaks ground for mixed-use Flagler Village project

Neiman Marcus CEO Geoffroy Van Raemdonck (Credit: Getty Images)

Struggling Neiman Marcus scores loan from Credit Suisse for Coral Gables store

arrow_forward_ios
Loading...