A long winter for Chinese real estate: Beijing market frozen during Spring Festival; Greentown sells more assets; 67% of developers could exit the market; Wenzhou capital goes from angel to devil

For the first time in three years, Beijing saw zero real estate contracts signed. The deals completed up until January 27 were for an average price of 17560 yuan per sqm, down 23.6% from last year's 22985 yuan average at the same time. 春节期间北京楼市完全“休眠” 三年来首次“零成交”

The Beijing market was also asleep from the developer front with zero new projects. This is down from the 4 launched in February 2011 and 8 in 2010. Spring Festival is always a slow period, the article notes that in 2010, in the two months after Spring Festival there were 52 and 40 projects. The article says that there have been 6 new developments in January until now, and that will likely be the final number.北京春节楼市彻底“歇了”

北京等地大量房企消失 降价可能成今年主旋律 Real estate firms are disappearing and price cuts will be the theme this year. In Beijing, 473 real estate firms have not renewed their licenses and will disappear in 2012, a rise of 155% from 2010. There are 3000 firms with licenses coming due and without a license, firms cannot buy land, which means they cannot continue doing business and are essentially exiting the market. Only 1000 firms have obtained licenses so far, and the article speculates that 2000 developers could disappear in the next five years. In Wuhan, the number of firms fell by 200 to 1375, a decline of 13%.

A lot of firms cancelling their licenses are those set up only in the past two years (typical bubble popping result as those late to the party are often the weakest players, be it Internet stocks, subprime borrowers or Chinese developers). However, while these small firms are exiting, there are also some large players, such as Beijing Shimao.

绿城拟出售4项目套现60亿人民币 Greentown to sell 4 properties for 6 billion yuan. That total (just under $1 billion) is way up from the 4 properties sold only a few weeks ago for about $300 million. The projects being sold are in Shanghai, Qingdao, Beijing and Wenzhou. UBS analysts project the firm will have negative cash flow for the year, even as it dumps properties.

因为炒房 温州民间资本从“天使”成“魔鬼”? Wenzhou capital goes from "Angel" to "Devil" as residents speculated in real estate markets around China. The article cites a government official who says Wenzhou buyers accounted for less than 10% of home buyers in Shanghai and only 0.75% in Chengdu, but others say their buying influenced the market. Wenzhou buyers did "group purchases" by bundling money and buying into developments around the country. They did this for at least a decade. As they exit, they will likely have the reverse effect. Wenzhou is considered the home of private enterprise in China; Wenzhou businessmen and investors are given a lot of respect. Markets are non-linear and this type of psychological effect helps amplify market swings.

Update: Beijing claims that there were no sales because the government processing system was down. The evidence from other cities indicates a major slowdown though.

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