2014-03-19

Home Prices and Sales Volume Still Plunging in Hangzhou

Telemarketers are calling everyone in the city trying to unload a property. iFeng covers it on its website if you want to have a look. The Youngor Xixi Qingxue property lists for 17,000 ¥/sqm on iFeng, but according to the article below (Google Translated) it is being pushed at 12,000 ¥/sqm, a drop of 29%. This is a single property, but clearly the pressure on some developers is still very high.

Also from the article, in Hangzhou, sales volume from March 2 to March 15 was 843 units versus 1832 over the same period last year, a drop of 53%. Volume leads price; either volume picks up or more discounts are coming.

The company involved in the price cuts, Youngor (雅戈尔)(600177.SS) lost a 484 million yuan deposit last year when the government took back land it had purchased. That loss was equivalent to 30% of net profit that year according to this article: 雅戈尔4.8亿定金全额计提 李如成决策之失股民买单. According to that article, the company "retreated to Ningbo," which is now the location of another real estate slowdown.

Youngor is a poster child for the Chinese bubble:
Youngor Group Company Limited (SSE: 600177) is a public textiles and clothing enterprise in Ningbo, Zhejiang, China. It is engaged in designing, manufacturing, selling clothing products with its "Youngor" Brand for gentleman clothing. Youngor was established in 1993 and it was listed on the Shanghai Stock Exchange in 1998.

Youngor is primarily engaged in manufacture of apparels and textile products, as well as property development. Its major products are suits, shirts and casual wears, with the brand named Youngor, as well as woven fabrics. It also develops residential communities, villas and commercial office buildings in Ningbo and Hangzhou, Zhejiang province, as well as Suzhou, Jiangsu province. It operates its businesses in domestic and overseas markets.
Trading in shares of Youngor were halted in January on the Chinese stock exchange pending an announcement on an asset reorganization, and have now resumed trading.


From what I can gather from news reports, Youngor was planning on spinning off its real estate assets last year, but the problems in June 2013 (when it lost that deposit) damaged their plans and now it's been shelved for the time being.

I haven't researched Youngor. It is possible the company can survive further losses in its real estate ventures thanks to cash flow from its apparel sales, but certainly the stock could be at risk moving forward if housing markets in Hangzhou and Ningbo don't recover soon.


Article from above:
杭州楼市频频被做空房价大跌 单套房屋降价近百万
February, 70 cities, new commercial housing prices fell in four cities, namely, Wenzhou, Anqing, Mudanjiang, Jining. Among them, Wenzhou has eight consecutive months of decline.

A month ago, Dickson Beihai Park [ News Price apartment review ], Tianhong Champs [ News Price apartment Comments ] successively lower prices, so Hangzhou property market cast a shadow. Hangzhou property market prospects around the controversy, Younger stood to sing the empty side.

Recently, many people have received the Hangzhou on " Younger Xixi Qingxue [ News Price apartment reviews ] "Property of telemarketing calls, about the content, the" Xixi Qingxue weekend ready to engage in promotional activities in the project, the original price 17,000 yuan / square meters, now about 12,000 yuan / square meter, in the sale of a single set of listings fell nearly one million. "

For bargains, Xixi Qingxue aspect does not deny that the project sales manager, told the Securities Times reporter that the event belongs to the late liquidation behavior, about 10 sets of listings, the price range at 12,000 ~ 14,000 yuan / square meter so, do not set a specific price. Current sale items are 180 square meters large apartment, according to a decline of 5,000 yuan / square meter count, single drop of more than 90 million sets. According to real estate agency, told reporters, "Xixi Qingxue once priced at more than 20,000 yuan / square meter, so not a single set of gimmicks million decline."

Previously, Dickson Beihai Park, Tianhong Champs price cuts, the market's interpretation is due to adequate housing supply in the region, but "Xixi Qingxue" The price is illustrated, the amount of stock in the days before, developers " Xixi Wetland sitting on scarce resources "slogan is just a cloud.

Territory of the property market in Hangzhou, stained "Xixi" word, basically distributed in the surrounding Xixi wetland, and from "Xixi" word, buyers are basically read the two meanings: the environment, high quality . Xixi Qingxue example, the positioning of the Xixi Wetland next to high-end real estate landscape last May to October period, the introduction of 180 square meters of housing price was 22,000 to 2.3 million.

Xixi Qingxue markdowns, not unrelated to the overall environment of the current property market in Hangzhou. February wave of price cuts in late and did not activate volume Hangzhou property market. Instead, the property market in March was extremely cold, even where the Hangzhou Xixi Qingxue main city is no exception.

According transparent network data, March 2 to 15, the main city of Hangzhou, a total turnover of housing 843 units, the average daily turnover of only 60 sets. Compared with 1832 units last year, down more than 53%.

In fact, the prospects for the property market in Hangzhou, Younger started early bearish. Last June, the Younger release drained away Hangzhou Shenhua plots announcement. Prior to his retirement, the Younger has paid 20% of the total price of the land section, which is 484 million yuan deposit. Prior to retreat also means that 484 million bond for this boondoggle. At the time, the reason to abandon the Younger since January 2011, the policy environment, market supply and demand situation and the real estate market has undergone major changes, the tradeoff, to terminate the development of Shenhua plots.

Although the Younger was back to lead the market in an uproar, but now it seems the company's property market in Hangzhou judgment or been verified. Although this promotion listings Xixi Qingxue are "late", but in the past, regardless of geographical location or environment, such real estate will not be reduced to the point where a substantial price reduction figure out tray, overwhelmed by price meaningful.

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