Rise in sales and new construction as investment increases 18.9%
China’s real estate sector powered ahead in October, suggesting that private sector investment is starting to contribute more significantly to an economic recovery led so far by government spending.
Property sales and new construction surged, while investment in real estate rose 18.9 per cent in the first 10 months from a year earlier, picking up from 17.7 per cent in the first nine months, the National Bureau of Statistics reported yesterday.
Calculations show that investment growth in October alone slowed to 28.4 per cent from 37.0 per cent in September, and 34.6 per cent in August.
‘Although property investment dipped a bit in October from the previous two months, growth is still very strong and the trend is expected to continue, given the figures for sales and new starts,’ said Xing Ziqiang, an economist at China International Capital Corp (CICC) here.
Economists pay attention to the property data because real estate, which is dominated by private firms, accounts for more than 20 per cent of fixed- asset investment, the main engine of China’s growth in recent years.
Property sales growth measured by floor space quickened to 48.4 per cent in the first 10 months from 44.8 per cent in the first three quarters.
That translates into an 81.7 per cent surge in October alone, compared with a year earlier, up from 56.3 per cent growth in September, according to CICC.
Floor space started in the year to date rose from year-earlier levels in October for the first time since the beginning of 2009. The year-on-year increase in October was 56 per cent, CICC calculated. That matches September’s reading, which was the strongest in at least five years.
‘I think sales and new construction starts are more important figures than investment because they are leading indicators,’ Mr Xing said.
With the sector showing broad-based strength, property prices in 70 cities rose 3.9 per cent in October from a year earlier, up from 2.8 per cent in the year to September.
Source: Business Times, 11 Nov 2009
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