The cooling of the Chinese real estate market will greatly discouraged promoters to increase investment in the first half of the year said a market analyst.
The decline in enthusiasm was reflected in the sharp slowdown in investment and development, particularly in the fall in the number of new projects, said Meng Yin, Deputy General Secretary of the Market Committee of the Association of Real Estate Research China.
Combined with the decline in property sales, investment in the sector will remain weak over the coming months, Meng said in an article published in the latest edition of the magazine Caijing.
According to her, the investment of real estate developers in the sector grew 16.4 percent on-year between January and April, a decrease of 3.4 percentage points of growth rate over the same period last year . Government data showed that investment in the first five months of the year slowed further to 14.7 percent.
In addition, Meng said the new projects launched between January and April totaled 430 million square meters, a fall of 22.1 percent in terms of gross floor area, and during the first five months fell 18 6 percent yoy.
The slowdown in investment was due to a fall of 7.8 percent of real estate sales in the first five months of the year, expanding by 0.9 percentage points compared to January-April, according to government data.
According to Meng, China's property market has seen almost adjustments every three years since 2005. Unlike those times, however, the adjustment in 2014 resulted largely the same market, affected by the supply and demand and prices.
In the new situation, Meng said developers may be forced to adopt more prudent development strategies, rather than a massive investment and high indebtedness. Should also try to diversify their business in order to fend off potential risks.