Decreasing land prices may force Chinese developers to write down asset values, says Credit Suisse; 'exodus of small developers' could cause 'surge in land supply,' drive down land prices

Michelle Rivera

Michelle Rivera

May 31, 2011 – Industry Intelligence

LOS ANGELES , May 31, 2011 () – Decreasing prices of land could prompt property developers in China to write down and re-evaluate the value of their assets, according to a Credit Suisse survey, MarketWatch reported May 31.

Mainland Chinese and Hong Kong developers appear to be most at risk, due to aggressive additions made to their land banks in 2009 and 2010. Small developers are also a concern, as many don’t have the financial means to tough out an economic crisis.

Credit Suisse’s Hong Kong-based analysts said, “The potential exodus of small developers could be overwhelming, and result in a surge in land supply that may bring down land prices further,” MarketWatch reported.

So far this year, land sales have been down 20%, according to one industry export, according to the Credit Suisse report, which also indicated up to 50% in price declines for the year, most likely due to weak transaction volumes in cities, such as Beijing.

According to the report, construction companies’ confidence levels are down, as they see the situation worsening within the next few months.

As such, more construction companies are putting more resources toward going after accounts that are past due, filing lawsuits and even considering stopping work on projects because they are pessimistic about whether the contracts will be fulfilled, MarketWatch reported, citing Credit Suisse.

The primary source of this article is MarketWatch, Hong Kong, China, on May 31, 2011.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.

Share:

About Us

We deliver market news & information relevant to your business.

We monitor all your market drivers.

We aggregate, curate, filter and map your specific needs.

We deliver the right information to the right person at the right time.

Our Contacts

1990 S Bundy Dr. Suite #380,
Los Angeles, CA 90025 795

+1 (310) 558 0008
+1 (310) 558 0080 (FAX)

About Cookies On This Site

We collect data, including through use of cookies and similar technology ("cookies") that enchance the online experience. By clicking "I agree", you agree to our cookies, agree to bound by our Terms of Use, and acknowledge our Privacy Policy. For more information on our data practices and how to exercise your privacy rights, please see our Privacy Policy.