More Deals Closed as China Deleverages Real Estate Market
China has found another solution to their poorly performing market, a deleveraging campaign that has been going on. Mingtiandi reported that this has revived foreign investment in China's real estate market. This is according to Alvin Yip of Cushman & Wakefield.
Yip, in an interview found in the article, said that it was more challenging navigating a market on the rise. Developers with cash were more reluctant to release core assets; fund managers also looked to get more out of their investments. Deals with those kinds of requirements were harder to chase after.
Chinese authorities, however, have looked to control the rising prices and make more favorable conditions for other buyers in the market. More developers are also looking to raise capital through prime assets, getting an uptick in market activity. Yip, for his part, assisted in transactions in the Greater China market to the tune of RMB 80 billion.
There are other ways to boost China's economy other than just deleveraging. There are applications it can add to the economy's tax structure in the form of tax cuts, something that won't add more debt to the country's budget. This is one solution it sees without creating more problems, like the 4 trillion yuan stimulus.
SCMP said that the economic momentum had shown signs of slowing down to a halt. The People's Bank of China had also lowered the reserve requirement ratio for most of the major commercial banks. China intends to create as many solutions as it can, without adding to more problems than it can already afford.
The economic plan before had been a stimulus package to the tune of US$582 billion in 2008. It had worked for a time, while China's economic growth was fueled by it during the period from 2008 to 2009. The problem was that there was a sudden rise in local government debts, as well as non-financial corporate debts in other sectors.
China has learned the lessons of those bitter days and has decided to resort to tax cuts. Its target is to create domestic demand and confidence among investors, local or otherwise.
There are a lot of properties that could spur on the growth of the economy. There are shopping centers that could create demand among skilled players. Prime assets have since hit the market. If China continues on this course, then it could definitely create the solutions to its problems.