Developer Pan Hong cautiously optimistic that housing demand in China will return progressively

SINGAPORE Exchange-listed property developer Pan Hong is cautiously optimistic that core housing demand in China will improve as Chinese cities start to introduce measures to support the housing market.

In a filing to the Singapore bourse on Saturday (Jul 23) where it answered questions raised by shareholders regarding its annual report, Pan Hong said that the district government where its Run Ze Yuan project is located has initiated a “property coupon scheme”, under which local firms and property developers subsidise the local labour group in purchasing properties in the district.

Pan Hong added that it “will participate in (the) scheme, and foresees that (the) scheme would serve as an incentive for the recovery of investment appetite of potential property buyers.”

Since June, Pan Hong has been offering a “dynamic discount policy” to boost sales of the Run Ze Yuan project, while maintaining a certain profit margin.

This comes as property developers in China have been besieged by tough operating conditions, while market confidence and property prices have tanked in recent quarters. With several big highly-leveraged developers teetering in the balance, even as the global economy grows increasingly uncertain, demand for property is expected to remain tepid in the short to medium term.

Chinese cities “have started implementing stimulating or relieving measures to support the market, including a decrease in interest rates for first-time buyers, reduction of down payment proportions, and withdrawal of purchase limits”, Pan Hong went on to say. Since its projects are largely aimed at genuine home buyers, it is “cautiously optimistic” that core housing demand will improve and market confidence will progressively return.

Still, given the current market conditions, it said that it is adopting a more cautious approach when reviewing investment opportunities for longer-dated projects.

As at Mar 31, 2022, the group’s land bank spanned a total planned saleable gross floor area of 403,982 square metres in Huzhou and Shanwei.

The group has properties held under development and properties held for sale worth 573.59 million yuan (S$117.9 million) and 187.14 million yuan respectively, as at end-March.

The counter closed at S$0.123 last Friday, unchanged.