minority
14-03-13, 16:24
PUBLISHED MARCH 08, 2013
Billionaire says China curbs unsuccessful
Vincent Lo also suggests the new administration should build more social housing to boost supply
[SHANGHAI] China's property curbs in the past decade have been unsuccessful and the new round of measures will slow property sales, said billionaire Vincent Lo, also a member of the government's advisory board.
"Certainly they haven't been," said Mr Lo, chairman of Shui On Land Ltd, a Shanghai-based developer, in an interview in Beijing on Wednesday. "Had they been successful, home prices wouldn't have risen higher the more the government curbed."
China on March 1 imposed its toughest curbs in a year, ordering the central bank to raise downpayment requirements and interest rates for second mortgages in cities with excessive price gains, enforcing a property sales tax, and telling local governments with the biggest price pressures to tighten home-purchase limits.
It ordered individuals selling properties to pay a 20 per cent tax on the sale profit when the original purchase price is available, a levy that is being easily avoided. The new measures will slow down property sales immediately because the 20 per cent tax is not that easy to bear, Mr Lo said.
Developers benefited as homebuyers rushed to buy properties after interest rates were cut, spurring a rebound in prices in the second half of last year. China Vanke Co, the biggest developer that trades on Chinese exchanges outside of Hong Kong, said sales rose 28 per cent in February after increasing 56 per cent in January from a year earlier, while Shimao Property Holdings Ltd said they rose 60 per cent last month from a year earlier.
Shares of Shui On Land fell 1.4 per cent to HK$3.46 at the close of trading in Hong Kong, bringing its loss this year to 7.7 per cent. The 2013 decline compares with a 0.8 per cent gain in the Hang Seng Property Index.
The government kept housing prices from rising too quickly, outgoing Premier Wen Jiabao said in his work paper at the beginning of the National People's Congress this week in Beijing at the end of which he will be replaced by Li Keqiang.
Residential property prices have climbed 50 per cent during Mr Wen's last five-year term to the highest since China privatised home ownership in 1998, based on statistics bureau data. Home prices rose for the ninth straight month in February, according to real estate-website owner SouFun Holdings Ltd.
"I agree with the curbs as they will prevent a crazy housing market and bubbles," Mr Lo said. "But too much intervention will hamper the market's development."
The new administration should build more social housing to boost supply because that is the best way to curb the market, Mr Lo said. It should leave luxury homes to market mechanisms, he said. "If people have money and are able to afford, why should the government control?" he said.
There is a bubble in the Chinese property market, Wang Shi, chairman of China Vanke Co, the biggest developer listed on mainland exchanges, said in an interview on CBS Corp's 60 Minutes in the US, adding that "if there's a bubble" that spells "disaster".
The government has raised downpayment and mortgage requirements in its almost three-year effort to curb the property market. It also imposed a property tax for the first time here and in Chongqing, increased construction of low-cost social housing, and enacted home-purchase restrictions in about 40 cities.
Mr Lo, a member of the Chinese People's Political Consultative Conference, is in Beijing attending its annual week-long meeting. The conference is an advisory body to the People's Congress, the highest governmental body in the country.
Shares held by Mr Lo in Shui On, Great Eagle Holdings Ltd, and SOCAM Development Ltd are worth about US$2.7 billion, according to data compiled by Bloomberg.
Shui On said in January it will spin off the unit that developed the Xintiandi restaurant and bar district concept to focus on development. The developer plans to list the unit in Hong Kong. Mr Lo declined to say how much money it expects to raise and give a timetable for the initial public offering. - Bloomberg
Billionaire says China curbs unsuccessful
Vincent Lo also suggests the new administration should build more social housing to boost supply
[SHANGHAI] China's property curbs in the past decade have been unsuccessful and the new round of measures will slow property sales, said billionaire Vincent Lo, also a member of the government's advisory board.
"Certainly they haven't been," said Mr Lo, chairman of Shui On Land Ltd, a Shanghai-based developer, in an interview in Beijing on Wednesday. "Had they been successful, home prices wouldn't have risen higher the more the government curbed."
China on March 1 imposed its toughest curbs in a year, ordering the central bank to raise downpayment requirements and interest rates for second mortgages in cities with excessive price gains, enforcing a property sales tax, and telling local governments with the biggest price pressures to tighten home-purchase limits.
It ordered individuals selling properties to pay a 20 per cent tax on the sale profit when the original purchase price is available, a levy that is being easily avoided. The new measures will slow down property sales immediately because the 20 per cent tax is not that easy to bear, Mr Lo said.
Developers benefited as homebuyers rushed to buy properties after interest rates were cut, spurring a rebound in prices in the second half of last year. China Vanke Co, the biggest developer that trades on Chinese exchanges outside of Hong Kong, said sales rose 28 per cent in February after increasing 56 per cent in January from a year earlier, while Shimao Property Holdings Ltd said they rose 60 per cent last month from a year earlier.
Shares of Shui On Land fell 1.4 per cent to HK$3.46 at the close of trading in Hong Kong, bringing its loss this year to 7.7 per cent. The 2013 decline compares with a 0.8 per cent gain in the Hang Seng Property Index.
The government kept housing prices from rising too quickly, outgoing Premier Wen Jiabao said in his work paper at the beginning of the National People's Congress this week in Beijing at the end of which he will be replaced by Li Keqiang.
Residential property prices have climbed 50 per cent during Mr Wen's last five-year term to the highest since China privatised home ownership in 1998, based on statistics bureau data. Home prices rose for the ninth straight month in February, according to real estate-website owner SouFun Holdings Ltd.
"I agree with the curbs as they will prevent a crazy housing market and bubbles," Mr Lo said. "But too much intervention will hamper the market's development."
The new administration should build more social housing to boost supply because that is the best way to curb the market, Mr Lo said. It should leave luxury homes to market mechanisms, he said. "If people have money and are able to afford, why should the government control?" he said.
There is a bubble in the Chinese property market, Wang Shi, chairman of China Vanke Co, the biggest developer listed on mainland exchanges, said in an interview on CBS Corp's 60 Minutes in the US, adding that "if there's a bubble" that spells "disaster".
The government has raised downpayment and mortgage requirements in its almost three-year effort to curb the property market. It also imposed a property tax for the first time here and in Chongqing, increased construction of low-cost social housing, and enacted home-purchase restrictions in about 40 cities.
Mr Lo, a member of the Chinese People's Political Consultative Conference, is in Beijing attending its annual week-long meeting. The conference is an advisory body to the People's Congress, the highest governmental body in the country.
Shares held by Mr Lo in Shui On, Great Eagle Holdings Ltd, and SOCAM Development Ltd are worth about US$2.7 billion, according to data compiled by Bloomberg.
Shui On said in January it will spin off the unit that developed the Xintiandi restaurant and bar district concept to focus on development. The developer plans to list the unit in Hong Kong. Mr Lo declined to say how much money it expects to raise and give a timetable for the initial public offering. - Bloomberg