Top builder Vanke gives thumbs up to property tax leg­is­la­tion

China Daily (Canada) - - BUSINESS - By LIN JING lin­jingcd@chi­

Property tax leg­is­la­tion will be pos­i­tive for the whole sec­tor, said Yu Liang, pres­i­dent of China Vanke Co, the largest property de­vel­oper in China.

“Re­form in property tax is in­evitable. It will af­fect the whole in­dus­try in a pos­i­tive way,” said Yu on Thurs­day, adding the com­pany will ac­tively par­tic­i­pate in the con­struc­tion of gov­ern­mentsub­si­dized hous­ing.

Lee­Wee Liat, head of fi­nan­cials and property re­search with BNP Paribas SA, said the property tax will not rein in property prices be­cause it is mainly aimed at spec­u­la­tive de­mand.

“As a long-term mech­a­nism, a property tax will give an­other in­come chan­nel to lo­cal gov­ern­ments, which are used to re­ly­ing too much on land sales for rev­enue,” he said.

Pre­mier Li Ke­qiang said in his an­nual pol­icy speech on Wed­nes­day that China will pro­ceed with property tax leg­is­la­tion and will be­gin to build more than 7 mil­lion govern­ment- sub­si­dized homes.

It is also the first time property curbs were not men­tioned in the an­nual pol­icy speech.

Vanke posted an­nual rev­enue of 127.45 bil­lion yuan ($20.84 bil­lion), up by 31.6 per­cent from 2012.

It had a sales area of 14.9 mil­lion square me­ters in 2013, to­tal­ing 170.94 bil­lion yuan in value, rep­re­sent­ing in­creases of 15 per­cent and 21 per­cent re­spec­tively.

The com­pany ex­panded to over­seas mar­kets, in­clud­ing theUS and Sin­ga­pore, in 2013.

In Fe­bru­ary, the com­pany teamed up with US de­vel­op­ers RFR Hold­ing and Hines LLC on a high-end res­i­den­tial project in New York.

Yu said that in­ter­na­tion­al­iza­tion is one of the long-term strate­gies for Vanke, adding the com­pany will con­tinue to search for po­ten­tial op­por­tu­ni­ties this year.

The com­pany had sales of 40 bil­lion yuan in the first two months of this year. In Fe­bru­ary, it sold about 1 mil­lion square me­ters for 12.1 bil­lion yuan, up 19.4 per­cent and 29.6 per­cent re­spec­tively from the same pe­ri­ods last year.

A re­search note from the Gold­man Sachs Group Inc said China’s hous­ing sup­ply in most cities will in­crease in 2014 be­cause of weaker de­mand and af­ford­abil­ity, and an eco­nomic slow­down.

Chen Xing­dong, chief econ­o­mist with BNP Paribas, said the risk of property prices fall­ing will in­crease this year be­cause of the cu­mu­la­tive ef­fects of hous­ing con­trols and the govern­ment’s anti-cor­rup­tion drive.

In Jan­uary, the num­ber of cities where both prices in pri­mary and sec­ondary mar­kets wasstill ris­ing fell by three and six, to 62 and 48 re­spec­tively, com­pared with De­cem­ber, ac­cord­ing to the Na­tional Bureau of Sta­tis­tics.

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