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Greentown China Holdings Forecasts Real Estate Rebound Amidst Sector Challenges

Greentown China Holdings, a prominent player in China's real estate sector, is optimistic about a resurgence in home construction and sales in the second half of 2024. The Chairman, Zhang Yadong, cited an expected economic recovery and the release of pent-up housing demand as factors that would drive the turnaround next year. Despite a challenging environment in the real estate sector, Greentown plans to focus on top-tier cities for profit growth.

China Real Estate Rebound

Zhang expressed confidence in the resilience of the property sector, emphasizing its irreplaceable role in the economy. While acknowledging a potential downturn extending into the first half of 2024, he foresees a rebound in the second half, attributing it to the impact of relief measures implemented by the central government.

In a recent development, Greentown successfully secured tenders to acquire four land parcels in Hangzhou, worth 7.4 billion yuan (US$1.03 billion). The company, with a 24.6% ownership stake held by Hong Kong developer Wharf Holdings, remains committed to delivering high-quality homes in top-tier cities.


Zhang's optimistic outlook aligns with broader sentiments in the industry. Ni Hong, Minister of Housing and Urban-rural Development, had previously indicated in July that additional measures would be implemented to stimulate a recovery in the property market.

Greentown estimates that China's property sector will report total sales of 12 trillion yuan this year, reflecting an 11% decrease from 2022. Despite headwinds, real estate, along with related industries, still constitutes about a quarter of the nation's economy.

The real estate landscape in China has been marked by austerity measures introduced since 2020 to alleviate the debt burden on developers. The resulting wave of defaults, notably by companies like China Evergrande Group and Country Garden, has underscored the challenges facing the sector. Greentown's cautious approach to expansion and its focus on high-quality homes have contributed to its success amidst the industry turmoil.

The company posted encouraging financial results for the first half of 2023, with a net profit of 2.5 billion yuan, marking a 41.3% increase from the same period last year. Housing contract sales also showed robust growth, reaching 134.2 billion yuan, a 19% increase year-on-year.

Beijing aims to implement a series of policies to facilitate a gradual recovery in the real estate industry through 2025, as outlined by the Communist Party's decision-making body, the Politburo, in July. In September, the government unveiled a package of relief measures to support the struggling property market, providing homebuyers with access to cheaper mortgages and allowing them to borrow with lower upfront payments. Greentown's positive stance reflects a cautiously optimistic outlook for the sector's future, as the industry navigates through challenging times.


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