China’s real estate hard hit by coronavirus outbreak, all segments’ demand dwindled
 
China Knowledge Online
Feb 11, 2020
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Feb 11, 2020 (China Knowledge) - Due to coronavirus outbreak; office and industrial properties will be hardest hit. There is no appearance sign of bottoming out in coming weeks; severity could extend till mid-year.

Industry Highlights:

Real estate developers closed sales offices to avoid spreading of coronavirus

Currently, almost all real estate developers have closed their sales offices and project sites, and this is likely to extend to till the end of Feb – or, even March. The traditional peak season of real estate that takes place next month is likely to take a hard blow. Under the coronavirus outbreak across the country, China's real estate market is facing unprecedented pressure and challenges.

Office demand fell drastically due to coronavirus outbreak

In the past years, the rental office market will have a small peak two weeks after Lunar New Year. However, affected by the epidemic this year, a large number of employees are unable to start work or access to workplace due to non-resident’s quarantine requirement, resulting in weak office rental market – ground to zero. New furnishing or renovation works are also not permitted during this compulsory self-quarantine period. From the perspective of the owner, the epidemic will lead to a reduction in new demand in the short-term, further pushing up office vacancy.

China to launch real estate online sales platform

On Feb 6, China Real Estate Association issued circulars on opening up the country’s online sales platform for real estate properties. It is suggested that due to the novel coronavirus, the online sales platform for real estate should be developed in order to avoid possible mass infection by heavy human traffics in sales offices. The online sales platform will fully comply with the relevant regulations of housing construction, market supervision and other related departments on the release of housing information, truly and objectively reflect the real estate project development, and to disclose information fully.

Real estate enterprises donated RMB 1.7 bln to help prevent coronavirus outbreak

As of Feb 6, more than 181 real estate enterprises have donated over RMB 2.3 bln, 2.8 mln masks, 110,000 sets of isolation clothing and 1.1 mln pairs of gloves. Among them, Country Garden (2007), Vanke (000002), Evergrande (3333) and Sunac China (1918), China’s leading real estate enterprises, donated RMB 100 mln, RMB 100 mln, RMB 200 mln and RMB 110 mln, respectively, as a gesture of social responsibility.

PBoC launched RMB 1.7 trln reverse repo in two days

PBoC carried out a total of RMB 1.7 tril reverse repo in two days to ensure sufficient capital liquidity. On Feb 3, it launched a RMB 1.2 trln open market reverse repo to release capital liquidity, including a RMB 900 bln 7-day reverse repo operation with an interest rate of 2.40% and RMB 300 bln 14-day reverse repo 2.55% interest rate. On Feb 4, it carried out RMB 500 bln reverse repo operations, including RMB 380 bln 7-day and RMB 120 bln 14-day reverse repo operations, with interest rates of 2.4% and 2.55% respectively, the same as the previous trading day.

China reduced first-time housing mortgage rate in last two months

Last month the average interest rate of first-time housing mortgage in China was 5.51%, a decrease of 1bp MoM, 71bp higher than 5-year LPR. At the same time, such rate in 20 cities have also reduced on a MoM basis. In the short term, the level of mortgage rate is likely to maintain a steady and slow decline due to many factors, such as local city's policy, LPR's downward expectation and the bank's credit balance at the beginning of the year.

Real estate developers closed sales offices to avoid spreading of coronavirus

Currently, almost all real estate developers have closed their sales offices and project sites, and this is likely to extend to till the end of Feb – or, even March. The traditional peak season of real estate that takes place next month is likely to take a hard blow. Under the coronavirus outbreak across the country, China's real estate market is facing unprecedented pressure and challenges.

 
 
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