BEIJING: China’s property market is rife with speculation — both about rising house prices and about what the new government may do to curb them once it takes office next week.
Asset prices have whipsawed as investors first bet that government-mandated infrastructure spending would boost real estate prices, only to then fret about new measures to cool a market that has seen double-digit annual price rises in cities
like Beijing and Shenzhen.
Markets appear more nervous than the government about the pace of price rises revealed by official January housing data issued last week, and economists at influential
state-run think-tanks reckon investors are right to be worried that the new government is preparing to widen a pilot property tax as part of a broader reform of land and fiscal policies.
“China needs to establish a long-term policy system. Right now restrictions only target property transactions,” Sun Xuegong, an economist with a think-tank under China’s powerful National Development and Reform Commission, told Reuters.
He said China urgently needs a blueprint to stabilize the real estate market, and Xi Jinping and Li Keqiang - set to take over as president and premier, respectively, at China’s annual meeting of parliament from March 5 — would not shy away from delivering one.
Wang Jun, an economist with the China Centre for International Economic Exchanges (CCIEE) think-tank, believes the only thing holding back new property tightening measures has been the political transition. “Any breakthrough is impossible in the current government’s last month in office,” he said.
He said repeated assurances to curb home prices during outgoing Premier Wen Jiabao’s decade in charge had clearly failed and the new leadership would be determined not to let history repeat itself.
The raft of tightening options includes expanding the property tax to all of China’s biggest cities to raising downpayments and mortgage rates on homes — all of which would
likely dent the number of deals and put fresh strain on developers who need sales turnover to service their debt.
Domestic media have circulated what they say is a list of cities that may follow Shanghai and Chongqing on the property tax pilot the government started in 2011. Beijing, Shenzhen, Hangzhou, Wuhan and Xiangtan are all included, though no local government or ministry official has confirmed the candidates.
Analysts say it is likely that China’s big cities, currently experiencing double-digit annual property price rises, are most likely to bear the brunt of any new tightening moves.
“We’ll need to look for policy signal clues from the next leaders during the (parliament) meeting,” CCIEE’s Wang said.
So far, signals have been conflicting.
The last meeting of the Statte Council - China’s cabinet chaired by Wen last week merely said a campaign to cool property prices was on track, and restated its broad terms.
But bearish investors note that those terms include requiring provincial governors and city mayors to announce detailed plans to implement restrictions that so far have been applied inconsistently.
Beijing’s municipal government last year ordered its housing bureau to increase qualification checks of home buyers, including the number of homes owned by the families and how long they have paid social insurance in the city. It also doubled
efforts to punish officials assisting unqualified purchasers.
A new cabinet, to be formed by Li when Wen formally hands over the reins at the National People’s Congress, could feel it should act quickly to calm a market that has seen real estate prices soar 10-fold in major cities during the last decade.
Such measures might include higher downpayments and mortgage rates to curb speculation. That’s what has unnerved markets, with the Shanghai Stock Exchange property share sub-index down around 7 percent since hitting a 34-month high earlier this month. The CSI 300 index of top Shanghai and Shenzhen listings has followed a similar trajectory.
Investors fear home prices will overshoot expectations this year and invite tighter measures, such as raising downpayments to 70 percent of a home’s value from 60 percent currently. Mortgage rates could increase to 1.3 times the benchmark rate for second-time home buyers from 1.1 times — as tipped in the market last week before the cabinet statement.
First-time home purchases are still encouraged in China, with 30 percent downpayment and a discount on mortgage loans.
A move by China’s Ping An Bank this week to ban its regional branches from approving mortgages was seen by many bankers and analysts as a sign that Beijing was set to tighten controls on property to calm record prices.
“Given the political void until mid-March, the new policy looks to be more a goodwill political gesture by the outgoing administration than something that will really bite,” said Xianfang Ren, an economist with IHS Global Insight in Beijing.
According to Liu Jianwei, a senior statistician at China’s National Bureau of Statistics (NBS), housing inflation that picked up in the last quarter will taper off with quick and effective reinforcement of tightening measures issued over the past three years.
China had 236 million square meters of unsold homes at the end of last year, about three times last year’s monthly sales.
That is a reason for Liu to be confident about checking housing inflation. But IHS’ Ren reckons three months’ supply is very tight and leaves a risk of immediate price rises, with new tightening measures to follow imminently.
She added that if China failed to mop up liquidity, a decisive driver of home prices, “the housing market could run off the leash to the extent of careening the economy to the upside, yet unsustainable, track again.”
China’s home prices started to creep up again after the central bank cut interest rates in mid-2012 and injected liquidity to boost the world’s second-biggest economy. New home prices rose in 53 of the 70 cities monitored by NBS in January from December. On average, they rose 0.7 percent - making eight straight months of upward movement.
In Reuters’ weighted index, home prices were up 12.2 percent in Beijing and 10.8 percent in Guangzhou in January from a year earlier, returning to double-digit rises.
A Reuters poll in December showed economists expect house prices to rise 7 percent this year and 5 percent in 2014 on strong demand and a reviving economy.
The conclusion is clear, according to Lan Shen, an economist with Standard Chartered in Shanghai: “The government has not wrapped up its tightening policies yet.”
China property curbs in focus ahead of parliament meet
China property curbs in focus ahead of parliament meet
Riyadh Air secures license for advanced flight simulator
RIYADH: Saudi Arabia’s Riyadh Air has obtained a General Authority of Civil Aviation license for its first Boeing 787-9 full-flight simulator, a key step in its preparations for a 2025 operational launch.
The device, aimed at enhancing pilot training and safety standards, is a major addition to Riyadh Air’s training infrastructure.
This comes as Saudi Arabia aims to become a regional aviation hub, aligning with Vision 2030 goals to expand annual passenger capacity to 330 million, increase air cargo volumes to 4.5 million tonnes, and connect to 250 global destinations by the end of the decade.
Peter Bellew, chief operating officer at Riyadh Air, said: “This milestone underscores our commitment to world-class pilot training and operational excellence. The advanced simulator will enhance our pilots’ capabilities, aligning with Riyadh Air’s ambition to redefine aviation standards and deliver a next-level flying experience.”
He added: “We will continue investing in cutting-edge solutions that drive efficiency, safety, and excellence across our operations.”
Captain Sulaiman Al-Muhaimedi, GACA’s executive vice president for aviation safety and environmental sustainability, presented the operational certificate to Bellew during a ceremony.
Riyadh Air, a subsidiary of the Public Investment Fund launched by Crown Prince Mohammed bin Salman in March 2023, completed its first non-commercial flight from Riyadh to Jeddah for certification on Sept. 12.
Jordan’s exports to GAFTA countries rise by 15.6%
RIYADH: Jordan’s exports to countries within the Greater Arab Free Trade Area recorded a year-on-year rise of 15.6 percent by the end of November, new figures revealed
According to official statistics compiled by the Jordan News Agency, the Middle Eastern nation’s exports to GAFTA countries reached 3.25 billion Jordanian dinars ($362 billion), up from 2.81 billion dinars in the same period of the previous year. Jordan’s exports to the 18 GAFTA countries include fertilizers, pharmaceuticals, and agricultural products.
Similarly, the data showed that Jordan’s imports from the free trade zone also grew during the same period, rising by 8.5 percent to reach 4.69 billion dinars.
Imports from GAFTA countries primarily consist of crude oil and its derivatives, jewelry, and food products, as well as plastic sheets, titanium oxide, polystyrene, iron, and steel products, among others.
The newly released data falls in line with the recent rise in exports and imports recorded between Jordan and GAFTA countries, which jumped 9.7 percent and 9.3 percent, respectively, in the first three months of 2024.
The data also showed that the increase in exports and imports helped reduce the trade deficit with GAFTA countries to 1.43 billion dinars, down from 1.50 billion dinars in the same period last year.
Meanwhile, trade volume between Jordan and GAFTA countries surged to 7.95 billion dinars by the end of November, compared to 7.14 billion dinars in the same period a year earlier.
Saudi Arabia emerged as Jordan’s top export destination within the group, with exports to the country amounting to 1.07 billion dinars, a 13.7 percent rise from the same period in 2023.
The Kingdom also ranked as Jordan’s largest import source, with exchange totaling 2.69 billion dinars, resulting in a trade deficit of 1.66 billion dinars with Saudi Arabia by the end of November.
Jordan’s exports to US surges 14.9 percent
Additional data from Jordan News Agency disclosed that the country’s exports to the US increased 14.9 percent year on year in the first 11 months of 2024 to reach 2.04 billion dinars.
The country’s primary exports to the North American country include garments, jewelry, fertilizers, and pharmaceuticals as well as IT services, food products, live animals, and engineering goods.
Similarly, the data showed that Jordan’s imports from the US hit 1.13 billion dinars during the period, reflecting 4.7 rise compared to the corresponding period in 2023.
Jordan’s imports from the US consist of mineral products, transportation equipment, machinery, electrical appliances, and grains as well as chemicals, medical devices, processed foods, and wood pulp, among others.
This is in line with the fact that the trade partnership between the two nations was strengthened by the Free Trade Agreement, which was signed in October 2000 and took full effect in January 2010. This deal has led to an eightfold surge in bilateral trade, highlighting its importance in fortifying economic connections.
As a result of the rise in exports and imports, the trade balance between Jordan and the US recorded a surplus of 910 million dinars during the period.
The total volume of trade between the two countries climbed to 3.17 billion dinars by the end of November, compared to 2.86 billion dinars in the same period of 2023.
Saudi property sector poised for growth, key leaders at Real Estate Future Forum announce
RIYADH: Industry leaders, policymakers, and investors gathered at the Real Estate Future Forum in Riyadh, where key announcements highlighted Saudi Arabia’s ongoing focus on property development, investment strategies, and tourism expansion.
Building on these initiatives, the Governor of Asir Region Prince Turki Bin Talal revealed that the Public Investment Fund has nine projects in development, with four already launched and five underway.
“The largest PIF projects in the Kingdom are in the Asir region,” the governor said, adding that this is accompanied by an investment portfolio valued at SR30 billion ($7.9 billion).
Regarding hospitality, the governor highlighted that Asir currently has between 6,000 and 8,000 approved and licensed hotel rooms.
In line with this momentum, he also announced that the Ministry of Sports has officially recognized Abha’s World Cup bid as the best in the Kingdom.
Meanwhile, Prince Saud Bin Talal, governor of Al-Ahsa and acting CEO of the Al-Ahsa Development Authority, outlined plans for expanding the hospitality sector in the region.
“In our pipeline, we have more than seven or eight hotels and over 25 rural lodges. Among the key developments are three five-star hotels: Hilton, Radisson Blu, and Hilton Garden Inn,” he said.
The Saudi Minister of Tourism Ahmed Al-Khateeb underscored the rapid growth of the hospitality sector, revealing that the Kingdom currently has 475,000 hotel rooms, with projections to reach 675,000 by 2030.
Regarding hyper-tourism, he discussed the impact of the King Salman International Airport expansion and Riyadh Air, forecasting that at least 50 percent of the Kingdom’s tourism will be centered in the capital, while ensuring that efforts will not push the figure beyond 80–90 percent.
The expansion of King Salman International Airport is a key milestone in Saudi Arabia’s aviation growth, aligning with the country’s Vision 2030 objectives.
The first phase of the Terminal 1 expansion at King Khalid International Airport in Riyadh was inaugurated on Jan. 8, increasing the airport’s capacity to accommodate up to 7 million passengers annually.
This follows the completion of Terminals 3 and 4 in November 2022.
The airport has consistently been recognized as the Kingdom’s top-performing facility, upholding the highest compliance and operational standards.
In the financial sector, the Chairman of the Capital Market Authority Mohammed El-Kuwaiz highlighted the increasing focus on Saudi Arabia’s real estate investment market.
“Today, we have approximately 55 files for IPOs (initial public offerings) in the financial market, covering various sizes and companies. Around 20 percent of these files belong to real estate companies of different types,” he said.
He emphasized the growing diversity in real estate services, including developers and marketers, aligning with the Kingdom’s goal of securing financing across all productive sectors.
El-Kuwaiz further provided insights into best practices for listing companies, saying: “The best time to list a company is when its financial situation is stable and its funding needs are clear.”
He added: “If you’re prepared to share information as if they were partners, involve them in decision-making as if they were partners, and handle conflicts of interest as if they were partners, then you’re welcome.”
In a landmark decision, he also announced that listed companies owning properties in Makkah and Madinah can now welcome foreign investors, effective immediately. “On behalf of the CMA, we congratulate these companies,” he said.
Foreigners can now invest in Saudi-listed firms owning real estate in Makkah and Madinah, with non-Saudi ownership capped at 49 percent. The CMA said in a press release that the move enhances market competitiveness and supports Vision 2030.
The Real Estate Future Forum, running from Jan. 27 to 29 at the Four Seasons Hotel in Riyadh, aims to serve as a global platform for shaping the future of real estate.
With over 300 speakers from 85 countries, the event will focus on innovations, sustainability efforts, and investment strategies driving the sector under the theme, “Future for Humanity: Shaping Dreams into Reality.”
Saudi Arabia opens door for foreign investment in Makkah and Madinah real estate
RIYADH: Foreigners can now invest in Saudi-listed companies owning real estate in Makkah and Madinah, following a landmark decision by the Saudi Capital Market Authority.
Effective immediately, the move aims to boost the capital market’s competitiveness and align with the Kingdom’s Vision 2030 economic diversification objectives, the CMA announced in a press release.
While non-Saudis are allowed to purchase properties in the Kingdom, there are specific restrictions, and in the holy cities ownership is generally limited to Saudi nationals — although foreigners are allowed to lease properties there.
Under the new guidelines, foreign investments are limited to shares or convertible debt instruments of listed companies. Total non-Saudi ownership, including individuals and legal entities, is capped at 49 percent of a company’s shares.
However, strategic foreign investors are prohibited from holding stakes in these companies.
The move comes amid reforms across the region, with most neighboring countries allowing foreigners to own properties, primarily in free zones or designated areas under certain restrictions.
“Through this announcement, the Capital Market Authority aims to stimulate investment, enhance the attractiveness and efficiency of the capital market, and strengthen its regional and international competitiveness while supporting the local economy,” said the CMA.
The changes are also designed to stimulate foreign direct investment in the Kingdom’s capital market, as well as bolster its regional and international competitiveness.
“This includes attracting foreign capital and providing the necessary liquidity for current and future projects in Makkah and Madinah through the investment products available in the Saudi market, positioning it as a key funding source for these distinctive developmental projects,” added the CMA.
Strengthening the real estate sector and attracting more FDI into the Kingdom is one of the key goals outlined under the Vision 2030 program, as Saudi Arabia aims to reduce its dependence on crude revenues and diversify its economy.
The Kingdom aims to attract $100 billion in FDI by the end of this decade, and the government body has been implementing various initiatives and reforms to enhance the attractiveness of the capital market.
Some of these efforts include allowing foreign residents to directly invest in the stock market, enabling non-Saudi investors to access the market through swap agreements, and permitting qualified foreign capital institutions to invest in listed securities.
The CMA has also allowed foreign strategic investors to acquire strategic stakes in listed companies and directly invest in debt instruments.
In 2021, the CMA also allowed non-Saudis to subscribe to real estate funds investing within the boundaries of Makkah and Madinah, which played a crucial role in increasing the attractiveness of the capital market to both regional and international investors.
The share prices of real estate companies listed on Saudi Arabia’s stock exchange surged following the CMA’s announcement.
Knowledge Economic City saw its share price rise by 9.89 percent to SR16.66 ($4.44) at 12:45 p.m. Saudi time.
Jabal Omar Development Co.’s share price also increased by 10 percent to SR25.85, while Makkah Construction and Development Co.’s stock price climbed 9.84 percent to SR106, at 12:45 p.m. Saudi time.
Oil Updates — crude falls as Trump repeats call for OPEC to cut prices
- Trump reiterated call for OPEC to cut oil prices
- OPEC+ yet to react to Trump’s call for lower prices
- US puts on hold threat to slap tariffs on Colombia
SINGAPORE: Oil prices slipped on Monday after US President Trump called on OPEC to reduce prices following the announcement of wide-ranging measures to boost US oil and gas output in his first week in office.
Brent crude futures dropped 53 cents, or 0.68 percent, to $77.97 a barrel by 7:30 a.m. Saudi time after settling up 21 cents on Friday.
US West Texas Intermediate crude was at $74.16 a barrel, down 50 cents, or 0.67 percent.
Trump on Friday reiterated his call for the Organization of the Petroleum Exporting Countries to cut oil prices to hurt oil-rich Russia’s finances and help bring an end to the war in Ukraine.
“One way to stop it quickly is for OPEC to stop making so much money and drop the price of oil ... That war will stop right away,” Trump said.
Trump has also threatened to hit Russia “and other participating countries” with taxes, tariffs and sanctions if a deal to end the war in Ukraine is not struck soon.
Russian President Vladimir Putin said on Friday that he and Trump should meet to talk about the Ukraine war and energy prices.
“They are positioning for negotiations,” said John Driscoll of Singapore-based consultancy JTD Energy, adding that this creates volatility in oil markets.
He added that oil markets are probably skewed a little bit to the downside with Trump’s policies aimed at boosting US output as he seeks to secure overseas markets for US crude.
“He’s going to want to muscle into some of the OPEC market share so in that sense he’s kind of a competitor,” Driscoll said.
However, OPEC and its allies including Russia have yet to react to Trump’s call, with OPEC+ delegates pointing to a plan already in place to start raising oil output from April.
Both benchmarks posted their first decline in five weeks last week as concerns eased about sanctions on Russia disrupting supplies.
Goldman Sachs analysts said they do not expect a big hit to Russian production as higher freight rates have incentivized higher supply of non-sanctioned ships to move Russian oil while the deepening in the discount on the affected Russian ESPO grade attracts price-sensitive buyers to keep purchasing the oil.
“As the ultimate goal of sanctions is to reduce Russian oil revenues, we assume that Western policymakers will prioritize maximizing discounts on Russian barrels over reducing Russian volumes,” the analysts said in a note.
Still, JP Morgan analysts said some risk premium is justified given that nearly 20 percent of the global Aframax fleet currently faces sanctions.
“The application of sanctions on the Russian energy sector as leverage in future negotiations could go either way, indicating that a zero risk premium is not appropriate,” they added in a note.
On another front, Washington swiftly reversed plans to impose sanctions and tariffs on Colombia, after the South American nation agreed to accept deported migrants from the US, the White House said in a statement late on Sunday.
Sanctions could have disrupted oil supply, as Colombia last year sent about 41 percent of its seaborne crude exports to the US, according to data from analytics firm Kpler.
