Improving transport, favourable policies may boost new home sales in mainland Chinese Greater Bay Area cities in 2024, Cushman says

“According to past experience, it usually takes some time for the market to digest and react to new policies,” said Alva To, Cushman’s vice-president and head of consulting for Greater China.

“Therefore, although the residential transaction volume will not likely rebound significantly in the short term, it is expected that entry barriers for potential buyers can be eased under the relaxation of regulatory measures.”

The market bottomed out in August and – despite a 6.2 per cent year-on-year drop for the whole of last year – has gradually been improving since, Cushman said. Home transactions rose 27 per cent in November when compared with August, for instance.

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Among the eleven cities of the GBA, Huizhou performed particularly well, with a 14.1 per cent increase in primary home sales. Other cities such as Guangzhou, Shenzhen and Zhuhai also recorded growth of around 3 per cent.

Cushman said it also expects more Hong Kong buyers to purchase homes in mainland GBA cities, thanks to increasing connectivity within the development zone and the current strength of the Hong Kong dollar against the yuan, To said.

US investment bank Jefferies, however, said in a report on Wednesday that Chinese property transactions, which dropped by 8.5 per cent in 2023, should remain under pressure in the first half of this year amid further adjustments in average sales prices.

Despite more policy funding, supportive policies that continue to focus on stabilising the sector are unlikely to turn the market around in the near term, Jefferies said.

Meanwhile, the total value of commercial real estate investment in the GBA reached 66.1 billion yuan, the second-highest level over the past five years, Cushman said.

Such investment accounted for about 30 per cent of China’s total, marking a significant jump from 18 per cent in 2018, when the GBA initiative was first announced, while domestic capital accounted for 98 per cent of the total number of deals.

“With the offshore yuan lending rates much higher than onshore rates, overseas institutional investors have often been restructuring their asset allocations amid a high interest rate environment, hence slowing their pace in the investment market,” said Charli Chan, Cushman’s executive director and head of capital markets in Hong Kong and mainland China.

“In contrast, mainland capital sources including state-owned enterprises, end-use buyers and private investors are relatively active, seizing the opportunity to bottom-fish for long-term investment while property prices are more rational amid the relatively low borrowing rates in mainland China.”