Property investment in China ‘may grow by 30%’

Source : Straits Times – 5 Sep 2009

China’s property investment growth may rebound to around 30 per cent next year and support the nation’s economic recovery, central bank adviser Fan Gang said.

‘As property developers rush to buy land and plan construction this year, investment activities will soon pick up pace,’ he told the China CEO Forum in Beijing yesterday.

Mr Fan is the academic member of the monetary policy committee at the People’s Bank of China.

China’s property sales surged 60 per cent by value in the first seven months, and home prices in 70 major cities rose the most in nine months in July from a year earlier, as Premier Wen Jiabao’s US$585 billion (S$843 billion) stimulus and an explosion of lending spur home construction and purchases.

Still, the 11.6 per cent expansion of property investment in the first seven months was one-third the pace in 2007, before a housing slump started.

‘A rebound in real estate investment will be the next engine supporting economic recovery after the government-led infrastructure construction plays a dominant role stimulating growth this year,’ Mr Lu Zhengwei, an economist at Industrial Bank Co, said by phone in Shanghai.

‘Growth of 20 per cent to 25 per cent in real estate investment is healthy, whereas a 30 per cent pace may trigger concern about overheating in the property sector.’

Property investment accounts for a third of overall fixed-asset spending by China.