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Hope for real estate: sales in China return to pre-Covid levels


China is a reflection of what will happen when the de-escalation ends. At least that's what the real estate, which seeks to transfer to Spain the recovery that is being observed there. Weekly sales in the 36 largest cities in the Asian country are returning to pre-Covid-19 levels, while property prices show remarkable resilience.

The data is quite encouraging. For example, the top 36 property developers have increased their presales volume by 2% year-on-year in April 2020 and the most relevant companies increased sales by more than 40%. "We expect this recovery to continue in the next two months, given the large number of new project launches," says JK Capital Management (La Française) fund manager Sabrina Ren.

But not only are those buildings already restored to health. According to the China Real Estate Index System (CREIS), total residential land transactions in 300 cities grew by 142% monthly and 24% yoy in April, which shows how optimistic the main real estate developers are about the prospects for the sector.

In Spain, the forecast goes this way, although perhaps not with as positive data as those of China. The current crisis in the sector is undeniable, but a great consensus affirms that the recovery will be rapid. They consider that there is a dammed demand that will emerge when the current uncertainty dissipates.

"We are in a situation of parenthesis, in which operations have been frozen pending the recovery of the good (economic) tone," remarked a couple of weeks ago the president and CEO of Savills Aguirre Newman in Barcelona , Anna Gener.

The rapid recovery in demand will prevent a large price adjustment and experts warn that there will be no time for investors wait for a bargain with significant discounts. "There is no point in taking an opportunistic position," said the CEO of Cushman & Wakefield in Spain, Oriol Barrachina.


JK Capital Management fund manager Sabrina Ren understands that for years the real estate sector has been "one of the most misunderstood in the Chinese economy." The perpetuity of the Communist Party has given it specificities that make it revolve around the level of regulatory interventionism applied by the central government, local authorities, the central bank and the financial regulatory body that oversees the banking system.

However, we would like to reiterate that the structural growth of the sector, since the housing reform of the mid and late 1990s, reflected the significant accumulated demand for private residential housing, the rapid growth of income and the ongoing urbanization, which leads to an increase in the value of the land, "says Ren.

In this context, rules out a real estate bubble, "although from time to time there is a regional imbalance, for example, an excess supply in cities with an influx of population and a simultaneous excess supply in others." He also remarks "as the Chinese middle class grows, housing has become not only a living space but also an asset class."

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