BEIJING (Reuters) - Property developer Greentown China (3900.HK) plans to invest heavily in land in the second half of the year when competition from rivals is likely to recede, Chief Executive Cao Zhounan said on Thursday.
Bids for land by Chinese real estate developers have remained unexpectedly strong this quarter, Cao said, but he expected the ability of rivals to fund purchases to wane as government curbs on the red hot property market dent sales.
“I originally thought the first quarter would be a good time to invest. But from what we’re seeing now we might have to wait until the third or fourth quarter,” Cao said in an interview .
The Hangzhou-based developer plans to focus on core areas in major cities, Cao told Reuters in Beijing.
China’s property sales surged in the first two months of the year despite government measures to cool the market, though real estate investment has since showed signs of easing, according to official data on Tuesday.
Property prices soared last year, prompting the authorities to impose wide-ranging restrictions on the property sector in more than two dozen Chinese cities to try to clamp down on speculation.
“Chinese developers still have ‘ammunition’, so they would fight very hard to bid for land,” said Cao, who was attending an event held by China Index Academy, the real estate research agency of Fang Holdings Ltd (SFUN.N).
“But I estimate many would face financial pressure due to the curbs in the second half,” the property developer said.
Cao said the biggest challenge facing China’s developers this year is that many overheated first- and second-tier cities have imposed price caps on new units being registered for sale.
China’s real estate investment rose 6.9 percent in 2016 as property sales in China saw the fastest annual growth in seven years. Curbs imposed on the market by the authorities include purchase limits and lending restrictions.
Cao said Greentown also planned to tap more Western markets to hedge against the risk of a falling exchange rate but he cautioned against “overly aggressive” overseas investment.
“I hope to bring back U.S dollar denominated revenues,” he said.
The yuan lost 6.6 percent against the dollar last year, the biggest annual loss since 1994, and Cao said Greentown was looking at markets including the United States, the United Kingdom and the rest of Europe.
Greentown ventured into overseas markets for the first time in 2016 with sales projects in Indonesia’s capital Jakarta.
“I‘m controlling the pace of expansion. It’s not our strategy to just make quick money, we want to establish an international brand,” he said.
Additional Reporting by Jenny Su; editing by David Clarke