Strict controls put China real estate market on a roller-coaster ride: Wang
WANG JIANLIN, China’s richest man, criticized the country’s close control of its property industry, saying the “excessive cyclicality” caused by that was a reason for his conglomerate’s planned move to exit the real estate development business.
China has been tightening home and land purchase requirements in major cities since midlast year to tame a housing bubble, after loosening in the previous year to drive economic growth.
The criticism is a rare one from Mr. Wang, who has previously backed China’s measures to guide the property industry. It comes after his Dalian Wanda Group said on Saturday 2016 revenue dropped by 13.9%, weighed by a 25% decline in its commercial property unit.
It was the first decline in Dalian Wanda Group’s revenue after years of double-digit growth.
“Wanda’s decision to exit real estate development is not because of its bearish take on China’s real estate industry but primarily based on two reasons,” Mr. Wang told an internal company annual meeting on Saturday, according to a Dalian Wanda release published on Monday.
“First, China’s real estate development market is too cyclical, to a degree that is, so to speak, rare around the world.”
“I have been in the real estate industry for 28 years... and I have witnessed some 10 rounds of market control, which happens around every approximately three years, with no boom lasting for four years or longer,” Mr. Wang said. “The excessive cyclicality of the industry tends to cause instability of cash flows and frequent changes in market expectation.”
China’s Ministry of Housing and Urban- Rural Development was not immediately available for comment.
The group has recently been moving toward an asset- light strategy, which means eventually being a property service provider, rather than selling property.
Wanda Commercial, which already includes more than 130 shopping malls and over a dozen planned mega-cultural developments throughout China, will open 50 more malls and sign contracts for around three more Wanda City this year.
“After the completion of all Wanda City projects, Dalian Wanda Commercial Properties will gradually exit from the real estate development industry,” Wanda said in a statement. —