As real estate market is on decline in China, the major players are re-evaluating their business strategy. The push by the Chinese government in framing its national policy regarding housing forces these firms to change course. Here are few highlights:
Current position of realty in China
1. Housing sale by floor area in 2021 was 1794.3 Million sq. metres falls to 1,117.4 Million sq. metres in 2023
2. Total real estate investment fell by 9.8% year-on-year, to the tune of Yuan 3 Trillion equal to USD 0.44 Trillion
3. Valuation of housing stock is around USD 113 Trillion with a growth rate in the range of 2.11% on average
4. Overall sales is dipping and the major players in housing market burned their fingers with a dip well over 30%
5. Added strain is the housing prices are down by
5% in 2023.
State policy re economic growth & housing
1. China will continue to emphasise on the manufacturing side of the economy with twin objectives of enhancing the quality as per technical standards and innovation along with price competitiveness
2. As regards to housing, concentration is placed on living as an abode rather than for holding it for trading, investment and/or speculation, provided that, secondary market of re-sale of houses be allowed due to reasons such as moving out of the area and so on.
Tweaking business strategy
1. Firms must alter the current business strategy of making a kill to the one based on long term stay in the market
2. Affordable housing as the goal must be in-built in long range planning
3. Re-assess the building materials in areas like sourcing, storing and using, such that optimum input cost is achieved
4. Fall of housing prices overall should be restricted to the run-of-mill structures
5. Luxurious and fabulous housing stock be marketed intensively to foreigners as well upper echelon persons domestically.
The crux of the matter is firms in real estate sector have got to analyse the changes taking place inside China as well as in the wider geoeconomics area where she is playing second to none role!
Cheers!
Muthu Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
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