The National Bureau of Statistics released its monthly update of home prices indices for 70 Chinese cities (LINK).
The data for Xinyuan’s markets are in the table below. Prices for a few markets not included in the NBS index have been taken from SouFun’s (S) 100 city price index (LINK) . New York condo prices are from Zillow (Z) (LINK)
The Central China markets have been steady performers. These cities have strong economic potential supported by good transportation infrastructure and labor supply. Xinyuan has phased development plans in cooperation with local governments enabling a predictable supply and price for future land acquisitions.
The Tier 1 cities have been China’s strongest markets. The cities are crowded and expensive, but offer the best jobs and cultural environment. Participation in these projects benefits the Xinyuan brand image. High land prices may inhibit Xinyuan’s appetite for acquiring a new project in 2016.
The Jiangsu Province cities close to Shanghai offer many of Shanghai’s strengths (good job prospects and cultural environment) in a more comfortable and affordable living environment. Expanding transportation links provide easy access by high speed rail and subway (from Kunshan) to Shanghai. It would not be surprising to see the company acquire a new development site here in 2016.
Xinyuan’s other Chinese projects are in cities with high economic growth, but where real estate markets have a short-term oversupply of inventory. Monetary and property market stimulus measures in 4Q15 appear to have stabilized these markets.
Williamsburg remains an extremely attractive market, but demand is now being met by a surge in condo supply.