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1、EquityResearchReport/SectorResearch/PropertyYu Fu200-20CITIC CTITIC2013E Annual Investment Strategy PropertyFrom prosperity to benigntransition9 January 2013Investment Highlights:A number of factors underpinning the long-term prosperity of theproperty sector are facing a turning point. From 41% in 2
2、005,Chinas homeownership rate climbed to 48% in 2010, approaching thesteady state of 53%. Another steadying factor is per capita urban2residential GFA, which stands at over 32 m currently. The pace ofdemolition of old houses may slow as the proportion of householdsliving in properties built before 1
3、990 drops (to 20% in 2010 from 33% in2005). Total fertility rate of national population stood at 1.18 in 2010,indicating that the society is moving towards rapid aging.The property sector is bidding farewell to the boom that lasted formore than two decades and entering a transition period. According
4、to our projections, average annual potential demand for commodityth th thhousing during the 12 , 13 and 14 Five-year Plan (FYP) period2 2 2stands at 1.38bn m , 1.21bn m and 1.01bn m , respectively. Whilecurrent demand for commodity housing is yet to meet the marketneeds, the size of new housing star
5、ts has already exceeded organicdemand. We believe that Chinas property cycle is already past the firstcritical point of a long cycle, and is commencing a transition periodfrom the earlier boom.During the transition period, cyclical policies will remain stablewhile systemic reforms will continue to a
6、dvance. We believe thatthe government will strictly adhere to the property control policies. Theprobability of easing purchase restrictions appears low. We do notexpect the weighted average mortgage interest rates to declinesubstantially. Amid market stability, systemic reforms (especiallyproperty t
7、ransaction tax and provident fund reforms) will continue toadvance in 2013E.The fundamentals of a benign transition period are characterizedby weak investment growth in development, and steady priceswith rising volumes. Due to: (i) new construction GFA higher thanpotential residential demand; and (i
8、i) potential demand higher thanactual sales GFA, we believe that steady prices amid rising volumesand weak investment growth in development will likely persist for along time. In 2013E, we forecast that sales GFA and sales income ofcommodity housing and investment in property development will grow11
9、%, 12% and 16% YoY, respectively.Risks associated with investing in the property sector: (i) Benigntransition may take an unexpected turn due to easing of cyclical controlpolicies (especially easing in purchase restrictions); and (ii)marginalization of A-share property stocks due to restrictions in
10、equityfinancing.Please read the disclaimer at the end of the reportOUTPERFORM(Reiterate)CITIC Securities ResearchCong ChenTel: 010-84588249Email: Practicing license No.:S1010510120047Tel: 010-60836707Email: Practicing license No.:S1010512080008Contact: Shanjun BaoTel: 021-68768321Email: Contact: Pan
11、 YangTel: 010-60836722Email: Performance relative to indexS&P/沪深300 房地产Property40120103 120303 120502 120701 120830 121029Source: CITIC Securities Research2013E Annual Investment Strategy Property Investment strategy: Cherry picking. Steady prices amid rising volume, stable policy andundemanding val
12、uation are positive catalyst for property stocks. However, such price steadiness amid risingvolume also suggests a looming transition period for the sector. We suggest that investors adhere to threeinvestment principles while picking stocks: (i) large developers; (ii) sustainable development in tier
13、-1 cities;and (iii) stocks that boast strength in process control and financing costs, to avoid long-term risks as well as tocapture short-term opportunities. Our recommendations include CM Property (000024) and Poly Real Estate(600048).Peers comparisonCompanyPrice(Rmb)NAV(Rmb)11EPS (Rmb)12E 13E14E1
14、1PER (x)12E 13E14ERatingGemdale (600383)Vanke (000002)Poly Real Estate (600048)CM Property (000024)Beijing Capital Devt (600376)Xinhu Zhongbao (600208)Zhongnan Construction (000961)RiseSun Real Estate (002146)Citychamp Dartong (600067)Binjiang Real Estate Group (002244)5.298.7511.4723.8510.133.1811.
15、5710.964.898.686.879.6518.5732.4218.794.7913.629.497.1913.000.670.880.921.511.260.230.800.820.680.580.681.121.202.021.210.281.091.120.760.970.731.461.632.871.410.311.41.490.881.460.791.52.213.601.930.421.461.981.141.4881013168141413715881012811111069767871087667657588646BUYBUYBUYBUYBUYBUYBUYBUYBUYBU
16、YMean12976Source: CITIC Securities ResearchNote: Closing price as of 30 Nov 12Please read the disclaimer at the end of the report2013E Annual Investment Strategy PropertyContentsChinas property sector is bidding farewell to the earlier boom and entering atransition period . 1Commercialization of res
17、idential housing in China is coming to an end . 1Long-term potential demand forecast . 5Determining the critical points in the two long cycles of Chinas property sector . 8Policy at critical point: Adhere to existing control policies and initiate systemicreforms . 9Policy dichotomy . 9Cyclical regul
18、ations will maintain a stable pace . 11The pace of systemic reforms may accelerate . 11Market characteristics of a benign transition period - weak investment growth, andsteady prices amid rising volumes .16Characteristics #1 of a benign transition period - weak investment growth . 16Characteristics
19、#2 of a benign transition period - Steady prices amid rising volume, or evendeclining prices amid rising volume . 20Risks associated with investing in the property sector .22Benign transition may take an unexpected turn due to easing of cyclical control policies 22Marginalization of A-share property
20、 stocks . 23Investment strategy: Cherry picking .24A two-prong strategy - Reduce judging the sector direction, strengthen the study ofcorporate growth patterns . 24Analysis of key companies. 29Please read the disclaimer at the end of the report2013E Annual Investment Strategy PropertyFiguresFig. 1:
21、Stable residential mix and 2010 residential mix (urban) . 1Fig. 2: Residential mix statistics (Urban) . 1Fig. 3: Urban residential solutions in Guangzhou . 2Fig. 4: US homeownership rate . 2Fig. 5: Urban per capita residential construction GFA . 3Fig. 6: Age of existing urban residential properties
22、as of 2005 and 2010 . 3Fig. 7: Dependents as % of total population in China . 4Fig. 8: Natural growth rate in China . 4Fig. 9: Total fertility rate of selected countries according to two different data sources . 4Fig. 10: Total fertility rate of China . 4Fig. 11: Chinas urbanization rate vs. rest of
23、 the world . 4Fig. 12: Shenzhens population by registered and non-registered households . 4Fig. 13: Japans per capital residential/usable GFA growth . 6Fig. 14: Annual growth in urbanization rate . 6Fig. 15: Turnaround point without considering policy changes and assuming sales GFAgrows 5% p.a. . 9F
24、ig. 16: Changes to sector policy and sector turnaround points .10Fig. 17: From prosperity to transition - China vs. Japan (curve refers to land price in Japanand to housing price in China, both indexed) .10Fig. 18: New mid/long-term residential consumer loan/sales of commodity housing . 11Fig. 19: N
25、on-performing mortgage loan ratio . 11Fig. 20: Theoretically, tax increase cannot lower product prices .13Fig. 21: Proportion of Hong Kong properties purchased with mainland funds before andafter SSD launch .13Fig. 22: Total contribution and outstanding balance of housing provident fund in China .14
26、Fig. 23: Personal loan ratio of provident fund by region .14Fig. 24: Conceptual framework of Chinas provident fund system .15Fig. 25: Growth in property development investment and residential construction GFA .16Fig. 26: Growth in new construction GFA of commodity housing .16Fig. 27: Annual redundan
27、cy from new construction GFA exceeding sales GFA .17Fig. 28: (New construction GFA - Sales GFA) / sales GFA .17Fig. 29: Breakdown of property development investment .19Fig. 30: YoY growth in broken down items (by month) .19Fig. 31: Cash inflow from purchase of commodities and services .19Fig. 32: Qu
28、arterly new operating cash flow .19Please read the disclaimer at the end of the report2013E Annual Investment Strategy PropertyFig. 33: Residential price index of 100 cities .20Fig. 34: Number of cities posting MoM rising, flat and declining property prices .20Fig. 35: Sales volume and price perform
29、ance of Evergrande Real Estate .21Fig. 36: Absolute supply index of 15 cities, Shanghai and Beijing (13 Dec 11 = 1) .21Fig. 37: Annual GFA growth of newly launched properties .21Fig. 38: Legacy inventory at the beginning of the year (monthly) .21Fig.39: Cash on hand after deducting short-term borrow
30、ings as proportion of total assets22Fig. 40: Cash on hand after deducting short-term borrowings as proportion of total assets:Sector vs. leading developers .22Fig. 41: Number of Mainland property stocks and A-share stocks among top twentyproperty developers .23Fig. 42: Revenue of Mainland property s
31、tocks and A-share stocks in top twenty propertydevelopers .23Fig. 43: Valuation of property sector vs. broader market .24Fig. 44: Sector PER .24Fig. 45: Market share of top ten players by sales, 2008-1H12 .25Fig. 46: Average sales growth of top ten and top twenty players and the sector .25Fig. 47: G
32、rowth in new housing starts of Big Four developers vs. sector, 2009-11 .25Fig. 48: Average advance receipts as proportion of total assets, Big Four developers vs.sector .25Fig. 49: Annual transaction volume and market share of top eight players in US propertymarket, 2007-09 .26Fig. 50: Market share
33、of top four players in US property market, 2007-09 .26Fig. 51: (Cash on hand - short-term borrowings) / total assets .26Fig. 52: Interest-bearing debt ratio.26Fig. 53: Property investment in tier-3/4 cities and 35 large & mid-sized cities, 2009 .27Fig. 54: Land sold / sales GFA .27Fig. 55: Floor pri
34、ce and premium rate of land transacted in four tier-1 cities .27Fig. 56: Floor price and premium rate of land transacted in 17 tier-2/3 cities .27Fig. 57: Issues surrounding the sustainable development in tier-1 cities .28Please read the disclaimer at the end of the report2013E Annual Investment Str
35、ategy PropertyTablesTable 1: Global residential developments prior to 1996 . 2Table 2: Annual growth in per capita residential GFA: Other countries vs. China . 2thTable 3: Estimated real demand for commodity housing during the 12 FYP period. 5thTable 4: Estimated real demand for commodity housing du
36、ring the 13 FYP period. 6thTable 5: Estimated real demand for commodity housing during the 14 FYP period. 8Table 6: Secondary residential market transactions . 11Table 7: Common property purchase scenarios .12Table 8: Hong Kong property control policies since 19 Nov 10 .12Table 9: Singapores propert
37、y control policies as of 13 Jan 11 .12Table 10: Singapores property control policies as of 7 Dec 11 .13Table 11: The five major developers posted lower sales than new housing starts .17Table 12: Quarterly new housing starts and completion in the long cycle .17Table 13: Effective construction GFA for
38、ecast . 18Table 14: Breakdown and building & installation investment forecast .18Table 15: Breakdown and forecast of land-related factors affecting developmentinvestment growth .19Table 16: Summary of property investment growth forecast .20Table 17: Historical breakdown and commodity housing sales f
39、orecast .22Table 18: Acquisition of overseas listed companies by A-share property stocks.23Table 19: Peers comparison .24Table 20: Examples of agency contracts of Binjiang Real Estate Group.26Table 21: Change in market share of leading developers in major markets, 2009-11.28Please read the disclaime
40、r at the end of the report保障房租房租房自有产权Commodity保障房购买原公房Target mix2010 mixUncompletedhousing reform建房其他Rented public12013E Annual Investment Strategy PropertyAfter several rounds of applying market regulations, Chinas property market has alwaysexhibited a major boom cycle consisting of short and long
41、cycles. The former refers to upsand downs in the sector due to proactive policy intervention in property prices, while the latteris due to shifting fundamentals supporting prices. Although the short cycle gives way to thelong cycles, the long cycle is so lengthy that only when we get close to that p
42、oint in time, wecan feel its presence and carry out any meaningful in-depth study.We believe that the year 2013E may well be an important milestone in the long cycle ofChinas property sector.Chinas property sector is bidding farewell to theearlier boom and entering a transition periodCommercializati
43、on of residential housing in China is coming to anendAmong the various factors impacting the long cycle of Chinas property sector, the first ishomeownership rate, or commercialization of properties. Historically, the urgent desire ofresidents to increase homeownership rate was the driver triggering
44、short-term exponentialdemand.In mature economies like the US, homeownership rate stands at 65%, implying that 65%of its residents enjoy property rights. In the US, housing protection is done through means of“demand-side subsidy” rather than “supply-side subsidy”. Welfare housing accounts for only2%
45、of existing housing, leaving 33% of residents to rent property from the market. Weassume that the housing source in the US is stable. On the other hand, in China thisimplements “supply-side subsidy”, welfare housing accounts for 20% of the total in meetingresidential needs. Among the remaining 80% r
46、esidents, it is estimated that 26%-27% (33%* 80%) rent houses, with the rest having their own houses.In China, the homeownership falls under two categories: properties for which the ownershipwas transferred to the individual after the housing reform, and newly constructed commodityhousing. From 41%
47、in 2005, the proportion of residents comprising the above two types ofprivate ownership increased to 48% of the total in 2010. Given the accelerated constructionof commodity housing in the past two years, we have reason to believe that Chinashomeownership should have risen to over 50%. This implies
48、a relatively stable market, andthat commercialization of properties is coming to an end.Fig. 1: Stable residential mix and 2010 residentialmix (urban)Fig. 2: Residential mix statistics (Urban)100%0%21%Welfare housing100%Rental housing80%80%60%40%53%27%48%Rental housingHomeownership60%40%商品房 housingW
49、elfare housingPurchase of public housing20%0%20%目标结构23%8%10年结构未完成房改20%0%200020052010租公房自housingself-builtothersSource: NBSPlease read the disclaimer at the end of the reportSource: NBS20022004 20052008 2009 201020032006 20072005 2006 2007 2008 2009 2010 2011Present当前in租赁公房住房自有率房改私房CommodityOthers2(m
50、 )222013E Annual Investment Strategy PropertyFig. 3: UrbanresidentialsolutionsFig. 4: US homeownership rateGuangzhou100%80%60%Rented public housingRented private housing租赁私房Existing private housing原有私房70696867Homeownership rate40%Private housinghousing reformafter666520%0%Source: Guangzhou Bureau of
51、 Statistics商品房 housing其他6463Source: Beijing Bureau of Statistics, China IndexResearch InstitutePer capita residential GFA has limited room for improvementWhile there is no limit to residents desire for improvement in lifestyle, the marginalsatisfaction in improvement is decreasing. When per capita G
52、FA reaches a certain size,social enthusiasm for residential demand subsides significantly. In the report entitled“Research on Building a Residential Target for a Well-off Society”, the Ministry of Housingand Urban-Rural Development (MOHURD) set the per capita residential construction GFA2 2target fo
53、r a well-off society at 35 m . If the 35 m as mentioned in the report is the relatively2satisfactory residential GFA, there is only a 2.35 m gap from now to achieve this level.Table 1: Global residential developments prior to 1996Proportion ofCities by income groupPer capita No. of occupants Proport
54、ion ofresidential GFA per room permanent structureresidential propertieswith water supplyLow income countriesLow/middle income countriesMiddle income countriesMiddle/high income countriesHigh income countries6.18.815.122.035.02.52.21.71.00.767%86%94%99%100%56%74%94%99%100%Source: “Research on Buildi
55、ng a Residential Target for a Well-off Society” from the former Ministry of ConstructionWe have analysed the per capita residential GFA of 11 countries and regions at differentpoints of time. Among those with accessible data, the arithmetic average of per capita living2space grew 0.41 m during the r
56、espective period of time (see table below). Assuming anefficiency rate of 0.8, per capita residential GFA (usable GFA) in China has grown 0.86 mafter the housing reform, outperforming the pace of improvements made to housingconditions in any other country with available data.Table 2: Annual growth i
57、n per capita residential GFA: Other countries vs. ChinaCountry (region)TaiwanSouth KoreaSwitzerlandVietnamJapanFinlandAzerbaijanTurkmenistanBelarusRussiaHong KongAverage annual growthChina construction GFAAnnual growth0.720.600.480.470.450.400.360.300.280.250.180.411.09Period1998-20111995-20001980-2
58、0001993-20041963-20081985-20112005-20102000-20071991-20081996-20002002-20122005-2011Final observation44.220.243.613.536.639.444.019.923.219.312.928.832.7Initial observation34.917.234.08.316.428.945.817.818.418.311.126.1Please read the disclaimer at the end of the report人均住宅建筑面积00年后1990s1980s80年代前320
59、13E Annual Investment Strategy PropertyCountry (region)China construction GFAChina construction GFAChina residential GFAChina residential GFAChina residential GFAAnnual growth1.060.660.870.850.53Period1998-20051985-19982005-20111998-20051985-1998Final observation26.118.726.120.915.0Initial observati
60、on18.710.020.915.08.0Source: Respective statistics bureaus, the United NationsIn terms of absolute living conditions, China is already better than many developing countries,even exceeding the level of South Korea in 2000 (no current data available). Based on2efficiency rate, Chinas per capita reside
61、ntial GFA reached over 26 m in 2011.Fig. 5: Urban per capita residential constructionFig. 6: Age of existing urban residentialGFA2(m )properties as of 2005 and 201035.0Per capita residential construction GFA32.7100%8.1%5.0%30.025.020.015.014.217.020.827.180%60%40%24.8%43.5%15.3%34.7%After 200090年代10
62、.05.00.020%0%23.6%45.0%80年代Before 1980s1991199620012006201120052010Source: NBSSource: NBSRenovation of old houses is nearing completionPutting it simply, all properties built before 1990 are considered as properties requiringaccelerated depreciation. These properties accounted for 33% of existing pr
63、operties in 2005and dropped at an average of 2.5ppts p.a., to 20% in 2010. In comparison, properties builtafter 2000 surged from 24% in 2005 to 45% in 2010. At end-2012E, we estimate thatresidential properties built after 2000 and before 1980 accounted for nearly 50% and15%-20% of existing propertie
64、s, respectively. As the number of existing properties thatrequire accelerated depreciation has been reduced by almost half, the pace of old citytransformation and demolition will obviously slow down and squeeze the resulting demand inthe coming years.From demographic dividend to severe ageingThe cur
65、rent population structure is showing signs of directional changes. According to theCensus Bureau, the downtrend of dependents (those under 15 and over 65) as a percentageof total population has changed since 2011 and stood at 25.6%. In terms of age mix, theproportion of the aged and juvenile populat
66、ion decreased rapidly from 3.1% in 2002 to 1.8%in 2011. The sharp decline of juvenile population suggests a rising trend of dependents in thefuture. In other words, Chinas demographic dividend is nearing an end.Please read the disclaimer at the end of the report20022003200420052006200720082009201020
67、1119751985199020002005Shanghai1965197019801995WorldaverageArgentinaAustraliaS.KoreaCanadaFranceRussiaJapanChinaEgyptUKUSGuangdongNationwideZhejiangBeijingHenanLiaoningGuangxi2010(%)300-14 years oldNatural growth rate65 years old and aboveCIA World Factbook联合国世界人口展望Total fertility rateRegistered非户籍人口
68、thth42013E Annual Investment Strategy PropertyFig. 7: Dependents as % of total population inChina占总人口比例:0-14岁Fig. 8: Natural growth rate in China人口自然增长率353025201510占总人口比例:65岁及以上2520151050Source: The United Nations World Population Prospectsand othersFig. 9: Total fertility rate of selected countries
69、according to two different data sources50Source: NBSFig. 10: Total fertility rate of China3.53中情局世界概况United Nations World Population Prospects2.0总和生育率2.521.510.51.501.000中 韩 日 俄 加 澳 英 美 法 阿 世 埃国 国 本 罗 拿 大 国 国 国 根 界 及0.50斯 大 利亚廷 平均0.00全国 北京 广东 广西 浙江 辽宁 上海 河南Source: CIA World Factbook - United Nations
70、 WorldSource: NBSPopulation ProspectsUrbanization From urbanization of space to citizenshipFig. 11: Chinas urbanization rate vs. rest of theworldFig. 12: Shenzhens population by registeredand non-registered households (10k people)ChinaDevelopedeconomiesDevelopingeconomies1200户籍人口populationNon-regist
71、ered Population100080060040020002004 2005 2006 2007 2008 2009 2010 2011Source: United Nations, CITIC Securities ResearchSource: Wind, CITIC Securities ResearchChinas earlier rapid urbanization could be attributed to the low starting point. The very lowurbanization rate was the result of substantial
72、systemic dividend. The continued promotion ofurbanization is facing various problems today, mainly due to a series of systemic issuesrather than the shortage of urban development space.According to urbanization goals of the latest FYPs, prior to the 18 National PeoplesCongress (NPC), urbanization wa
73、s mostly within the boundaries of “spatial economics”associated with regional development, with the quantitative logic of spatial developmentbeing the major consideration. In comparison, the 18 NPCs guidance on future urbanizationPlease read the disclaimer at the end of the report52013E Annual Inves
74、tment Strategy Propertyemphasized on promoting systemic reforms in addition to spatial development, i.e.,“qualitative development”.Long-term potential demand forecastWe have used the potential China property market demand calculation model to derive thespecific point in time for the market to achiev
75、e turnaround. Our key assumptions include: (i)2 thurban per capita residential/useable GFA increase of 0.8 m p.a. during the 12 FYP period,2which is equivalent to an annual growth of 1 m in construction GFA; (ii) urbanization ratethadvancing 1ppt each year; (iii) 0.45% natural growth rate of populat
76、ion during the 12 FYPperiod annually; (iv) the supply of 36mn welfare (non-commodity) housing units; and (iv) anaverage useful life of 35 years for existing housing units.thTable 3: Estimated real demand for commodity housing during the 12 FYP periodSubjectUrban per capita annual residential GFA gro
77、wthduring the 12 th FYP periodAverage efficiency rateAnnual urbanization growth rateduring the 12 th FYP periodItem Calculation(1)(2)(3)Value0.880%1%Unitm 2%AssumptionWelfare housing (non-commodity housing)constructed during the 12 th FYP periodAverage useful life ofexisting propertiesAnnual natural
78、 growth rateduring the 12 th FYP periodAverage construction GFA of welfare housingduring the 12 th FYP periodUrbanization rate at end-11 th FYP periodUrban per capita residential GFAat end-11 th FYP periodUrban populationat end-11 th FYP periodNational populationat end-11 th FYP period(4)(5)(6)(7)(8
79、)(9)(10)(11)3600350.45%7049.9%31.66697813409110k unitsYear%m 2%m 210k people10k peopleUrban residential propertiesat end-11 th FYP period(12)(9) x (10)2116504 10k m 2Urbanization rateat end-12 th FYP periodAnnual average of damaged housesduring the 12 th FYP periodTotal damaged housesduring the 12 t
80、h FYP period(13)(14)(15)(8) + (3) x 5(12) (5)(14) x 554.9%60472302358%10k m 210k m 2CalculationNational populationat end-12 th FYP periodUrban population atend-12 th FYP periodUrban per capita residential GFAat end-11 th FYP periodUrban per capita residential GFA atend-12 th FYP period(16)(17)(18)(1
81、9)(11) x (1 + (6) x 5(16) x (13)(8) x (1)(18) + (1) x 51371357535525.329.310k people10k peoplem2m 2Urban residential demandat end-12 th FYP period(20)(19) x (17) (2)2757993 10k m 2Welfare housing construction GFAduring the 12 th FYP periodNew residential demandduring the 12 th FYP periodNew demand f
82、or commodity housingduring the 12 th FYP periodAnnual average new demand for commodity housingduring the 12 th FYP period(21)(22)(23)(24)(4) x (7)(20) + (15) - (12)(22) - (21)(23) 525200094384769184713836910k m 210k m 210k m 210k m 2Source: NBS, MOHURD, CITIC Securities Research2Based on the above a
83、ssumptions, we forecast commodity housing to grow 1.38bn m p.a.thduring the 12 FYP period.Please read the disclaimer at the end of the report196819731983199820032008197819881993当年人均居住使用面积之前五年人均居住使用面积增长40城市化率年增长62013E Annual Investment Strategy PropertythAssuming the new demand for commodity housing
84、is entirely met during the 12 FYP period,we can use the same method to calculate the annual demand for commodity housing duringththe 13 FYP period but with different set of assumptions.2First of all, the annual growth of 0.8 m in usable GFA is in fact due to a large number ofone-off reform factors.
85、Under normal circumstances, the existing living standards cannotthsupport the growth of per capita living space at such a fast pace. During the 13 FYP period,2the organic growth of per capita residential GFA is assumed to reach 0.4 m (usable GFAconcept).Fig. 13: Japans per capital residential/usable
86、Fig. 14: Annual growth in urbanization rateGFA growth2(m )(%)Per capita residential/usable GFA for the yearGrowth in per capita residential/usable GFA in previous 5 years0.62.0Annual growth in urbanization rate3530252015Source: Japan Statistics Bureau0.50.40.30.21.51.00.50.01978 1982 1986 1990 1994
87、1998 2002 2006 2010Source: NBSNext, despite the challenges faced in the course of urbanization, we also factor in the effortsmade by China in promoting urbanization reforms and solving deep-rooted problems. Duringththe 13 FYP period, we assume that annual urbanization rate will remain at 1%.thFurthe
88、r, we assume that the natural growth rate in China will hit zero during the 13 FYPperiod. Before the sixth census, experts had overestimated the peak in Chinas populationgrowth. The total fertility rate of the population was actually very low. An assessment thatthnational population growth will peak
89、 during the 13 FYP period appears more reasonable.We believe the scale of non-commodity housing will decline sharply going forward. Afterlaunching 36mn welfare housing units, the goal of providing welfare housing coverage for20% of urban population will be close to completion. We assume that 20mn no
90、n-commoditythhousing units will be rolled out during the 13 FYP period, a major proportion of which willcontinue to be welfare housing.Finally, the remaining average useful life of existing residential housing is assumed toincrease to 45 years.thTable 4: Estimated real demand for commodity housing d
91、uring the 13 FYP periodSubjectItemCalculationValueUnitUrban per capita annual residentialGFA growth(1)0.4m 2during the 13th FYP periodAverage efficiency rateAnnual urbanization growth ratethAssumption during the 13 FYP periodWelfare housing constructedduring the 13th FYP periodAverage useful life of
92、existing propertiesAnnual natural growth rate(2)(3)(4)(5)(6)80%1.0%2000450.00%10k unitsYear%Please read the disclaimer at the end of the report72013E Annual Investment Strategy PropertySubjectItemCalculationValueUnitduring the 13th FYP periodAverage construction GFA of welfarehousing(7)70m 2during t
93、he 13 th FYP periodUrbanization rate at end-12 th FYPperiodUrban per capita residential GFAat end-12 th FYP periodUrban populationat end-12 th FYP periodNational populationat end-12 th FYP period(8)(9)(10)(11)54.90%35.675, 287137, 135%m 210kpeople10kpeopleUrban residential propertiesat end-12 th FYP
94、 period(12)(9) x (10)2,228680,10k m 2Urbanization rateat end-13 th FYP periodAnnual average of damaged housesduring the 13 th FYP periodTotal damaged housesduring the 13 th FYP periodNational populationat end-13th FYP period(13)(14)(15)(16)(8) + (3) x 5(12) (5)(14) x 5(11) x (1 + (6) x 559.9%59, 561
95、297, 803137, 135%10k m 210k m 210kpeopleCalculationUrban population atend-13 th FYP periodUrban per capita residential GFAat end-12 th FYP periodUrban per capita residential GFA atend-13 th FYP period(17)(18)(19)(16) x (13)(9) x (2)(18) + (1) x 582, 14428.530.510kpeoplem 2m 2Urban residential demand
96、at end-13 th FYP period(20)(19) x (17) (2)3,689129,10k m 2Welfare housing construction GFAduring the 13 th FYP periodNew residential demandduring the 13 th FYP periodNew demand for commodity housingduring the 13 th FYP period(21)(22)(23)(4) x (7)(20) + (15) - (12)(22) - (21)140, 000747, 264607, 2641
97、0k m 210k m 210k m 2Annual average new demand forcommodity housing(24)(23) 5121, 45310k m 2during the 13 th FYP periodSource: NBS, MOHURD, CITIC Securities ResearchIf the demand during the 12th FYP period is met, commodity housing demand is forecast to2grow 1.21bn m p.a. during the 13th FYP period.t
98、hFinally, we calculate the potential residential demand during the 14 FYP period.With the further expansion in residential/usable GFA and the beginning of population aging,annual per capita residential/ usable GFA growth will decline to the levels of Russia or Japan2 thin 2012 or to 0.2 m during the
99、 14 FYP period.We continue to assume a 1% urbanization rate.Natural population growth rate is assumed at an average of -0.3% p.a.As welfare housing gradually transitions into monetary subsidy, we assume that 10mnthwelfare housing units will be added during the 14 FYP period.thDuring the 14 FYP perio
100、d, we believe that most of the old properties built before 1900s willhave disappeared, with the average useful life of the remaining units standing at 60 years.Please read the disclaimer at the end of the report82013E Annual Investment Strategy PropertythTable 5: Estimated real demand for commodity
101、housing during the 14 FYP periodSubjectItemCalculationValueUnitUrban per capita annual residentialGFA growth(1)0.2m 2during the 14 th FYP periodAverage efficiency rateAnnual urbanization growth rateduring the 14 th FYP periodWelfare housing constructedduring the 14 th FYP periodAssumption Average us
102、eful life ofexisting propertiesAnnual natural growth rateduring the 14 th FYP period(2)(3)(4)(5)(6)80%1.0%100060-0.30%10kunitsYear%Average construction GFA of welfarehousing(7)70m 2during the 14 th FYP periodUrbanization rate at end-13 th FYPperiodUrban per capita residential GFAat end-13 th FYP per
103、iodUrban populationat end-13 th FYP periodNational populationat end-13 th FYP period(8)(9)(10)(11)59.90%37.682, 144137, 135%m 210kpeople10kpeopleUrban residential propertiesat end-13 th FYP period(12)(9) x (10)3,617088,10k m 2Urbanization rateat end-14 th FYP periodAnnual average of damaged housesdu
104、ring the 14 th FYP periodTotal damaged housesduring the 14 th FYP periodNational populationat end-14 th FYP periodCalculation Urban population atend-14 th FYP periodUrban per capita residential GFAat end-13 th FYP periodUrban per capita residential GFA atend-14 th FYP period(13)(14)(15)(16)(17)(18)(
105、19)(8) + (3) x 5(12) (5)(14) x 5(11) x (1 + (6) x 5(16) x (13)(9) x (2)(18) + (1) x 564.9%51, 477257, 385135, 09187, 67430.131.1%10k m 210k m 210kpeople10kpeoplem 2m 2Urban residential demandat end-14 th FYP period(20)(19) x (17) (2)3,127406,10k m 2Welfare housing construction GFAduring the 14 th FY
106、P periodNew residential demandduring the 14 th FYP periodNew demand for commodity housingduring the 14 th FYP period(21)(22)(23)(4) x (7)(20) + (15) - (12)(22) - (21)70, 000574, 895504, 89510k m 210k m 210k m 2Annual average new demand forcommodity housing(24)(23) 5100, 97910k m 2during the 14 th FY
107、P periodSource: NBS, MOHURD, CITIC Securities ResearchDetermining the critical points in the two long cycles of Chinasproperty sectorDue to the presence of development cycles especially with deviation in new housing startsand sales, the long cycle of Chinas property market cannot be simply divided i
108、nto boom andbusts, in our view. Between boom and busts, there is a transition period. Before 2011, newconstruction and sales GFA of commodity housing were progressing at less than annualpotential demand. Under those circumstances, the acceleration in both development andsales could not meet the norm
109、al needs of residents, and prices increased naturally.2In 2011, nationwide new construction GFA reached 1.47bn m and exceeded potential2 2demand (1.38bn m ). However, nationwide sales GFA were less than 1bn m withoutexceeding normal residential needs. This was a phase of continued upbeat sales but w
110、ithPlease read the disclaimer at the end of the report）年内生需求Sales GFA (+5% p.a.)92013E Annual Investment Strategy Propertyincreasing mismatch between supply and demand over time, which we call a transition period.This was the first turnaround point for the property market in China.Fig. 15: Turnaroun
111、d point without considering policy changes and assuming sales GFA grows 5% p.a.2(100mn m )1513119Annual organic demand销售面积（年增长5%轨迹2011201220132014201520162017201820192020Source: CITIC Securities ResearchThe second critical point for the sector is the dividing line between the transition period andth
112、e recession period, which is the year when sales GFA exceed the sectors organic demand.Assuming a 5% YoY growth from 2013E onwards, nationwide sales GFA will exceed organicdemand in 2017E. In other words, based on this assumption, the second critical point willcome in 2017E.With the onset of housing
113、 recession, as population, urbanization rate and other factorscontinue to deteriorate, the recession is expected to sustain in the long term.Policy at critical point: Adhere to existing controlpolicies and initiate systemic reformsThe transition period is an objective reality and may not turn out to
114、 be as harsh as that ofJapan. The nature of the transition period mainly depends on the prevailing policy. We dividesector policies into two categories based on long-term supply and demand dynamics.Policy dichotomyType #1: Policies without impacting the organic demand for commodity housing. The most
115、typical of this type of policies is monetary policy, especially those impacting the cyclicalmovements of property purchase cost. Next in line is the purchase restriction policy that onlychanges the timing and pace of unleashing demand, which is equivalent to making transientchanges to the slope of t
116、he sales GFA curve. We call it “cyclical regulation”.Type #2: Policies that change the organic demand for commodity housing. The most typicalones are those concentrating on welfare housing, urbanization, and population. Tax and landare of dual nature. Tax changes are cyclical regulations if implemen
117、ted as cyclical restrictionor to encourage sector demand, such as temporary tax increases to suppress an overheatingmarket. If changes to the tax or land system are capable of moving the organic demand curve,then the policies fall into the second category which we refer to as “systemic reforms”.Plea
118、se read the disclaimer at the end of the report102013E Annual Investment Strategy PropertyFig. 16: Changes to sector policy and sector turnaround points2(100mn m )Annual organic demand (systems remain unchanged)Sales GFA (+5% p.a.)Annual organic demand (systemic changes)Sales GFA (+12.3% p.a.)Room f
119、or cyclical policychangesRoom for systemic policy changesChanges in turnaround pointSource: CITIC Securities ResearchFig. 17: From prosperity to transition - China vs. Japan (curve refers to land price in Japan and tohousing price in China, both indexed)PainfulProsperitytransitionDeclineProsperitySo
120、urce: WindPlease read the disclaimer at the end of the report新增居民中长期消费性贷款/商品房销售额1.2Non-performing mortgage112013E Annual Investment Strategy PropertyCyclical regulations will maintain a stable paceWe believe that the cyclical regulations will remain generally stable in 2013E. The purchaserestriction
121、 policy will continue. There may not be any adjustment in interest rates, or hedgingpolicies may be introduced specifically for market adjustment.Mounting pressures on economic growth and low leverage rate in housing purchase behaviorwill make it difficult to step up cyclical regulatory policies.Fig
122、. 18: New mid/long-term residential consumerloan/sales of commodity housingFig. 19: Non-performing mortgage loan ratio(%)40%35%30%25%20%15%10%5%0%New mid/long-term residential consumer loan/sales of commodityhousing1.00.80.60.40.20.0按揭贷款不良率 loan ratio2005 2006 2007 2008 2009 2010 2011200720082009201
123、02011Source: PBOC, NBSSource: CBRCAs housing prices have risen beyond the affordability of residents, the easing in regulation isunlikely.Therefore, we believe that the cyclical nature of sector control policies will remain stable in2013E.The pace of systemic reforms may accelerateTax system reformI
124、ncreasingly differentiated property transaction taxWe believe that differentiation will remain the core of property transaction tax reform.Differentiation refers to imposing higher transaction tax on the sale and purchase ofnon-owner occupied, speculative and non-local properties, as well as those t
125、hat makeimprovements ahead of requirements. Meanwhile, consideration will be given to thepossibility of providing tax relief for first-time buyers.Currently China imposes differentiated transaction tax in the secondary market, mainly tocombat short-term speculative investments. As seen in the past f
126、ew years, the degree ofproperty transaction tax differentiation has been expanding.Table 6: Secondary residential market transactionsTax on secondary residential marketTime required for obtaining certificates of title or tax receipttransactionsWithin 5 yearsOver 5 yearsBusinesstax,urbanconstruction
127、tax, education Transaction price x 5.5%surtaxExemptOrdinaryresidentialpropertyStamp duty (payable by bothbuyer and seller)Land VATPersonal income taxDeed (payable by buyer)ExemptExempt(Transaction price Original purchase Residential property sale onlyprice Reasonable costs) x 20% in 5 years: ExemptF
128、irst property: Construction GFA 90: Transaction price x 1.0%;Construction GFA 140: Transaction price x 1.5%Please read the disclaimer at the end of the report122013E Annual Investment Strategy PropertyTax on secondary residential marketTime required for obtaining certificates of title or tax receipt
129、transactionsBusiness tax, urbanconstruction tax, educationsurtaxWithin 5 yearsTransaction price x 5.5%Over 5 years(Transaction pricePurchase price) x 5.5%Non-ordinaryresidentialpropertyStamp duty (payable by bothbuyer and seller)Land VATPersonal income taxDeed (payable by buyer)ExemptExempt(Transact
130、ion price Original purchase Residential property sale onlyprice Reasonable costs) x 20% in 5 years: ExemptTransaction price x 3%Source: Century 21Table 7: Common property purchase scenariosScenarioPayable by seller Payable by buyer Agency feeTotalOrdinary commodity housing, ownership over 5 years, o
131、nlyproperty of seller, below 90 m 2 , first purchase by individualOrdinary commodity housing, ownership less than 5 years,below 90 m 2 , first purchase by individualOrdinary commodity housing, ownership less than 5 years,over 90 m 2 , first purchase by individual0.05%6.55%6.55%1.05%1.05%1.55%2%2%2%3
132、.10%9.60%10.10%Ordinary commodity housing, ownership less than 5 years,over 90 m 2 , second or above property of individual6.55%3.05%2% 11.60%Source: CITIC Securities Research, the percentage refers to percentage of total property costs, tax includes only businesstax and surcharge, stamp duty, indiv
133、idual tax and deed taxWe believe that there is still room for the further expansion in the differentiated levy applied totransaction tax. A typical example is the special stamp duty (SSD) imposed by Hong KongSpecial Administrative Region and Singapore to tackle exorbitantly high property prices.Tabl
134、e 8: Hong Kong property control policies since 19 Nov 10TimeNov 10Oct 12FormLaunched SSD on the sellerRaised SSD on the sellerContentLevied at 15% if the property is held for 6 months or less;Levied at 10% if the property is held for more than 6 months but lessthan 12 months; andLevied at 5% if the
135、property is held for more than 12 months but lessthan 24 months;The tax rate raised to 20% if the property is sold in 6 months after thepurchaseThe tax rate raised to 15% if the property is sold in 6-12 months afterthe purchaseThe tax rate raised to 10% if the property is sold in 12-24 months aftert
136、he purchaseSubject to an additional 5% BSD if the property is sold in 24-36 monthsafter the purchaseIntroduced Buyers Stamp Buyers other than Hong Kong permanent residents including companiesDuty (BSD)incorporated in Hong Kong and overseas are subject to 15% BSD.Source: Hong Kong Government, CITIC S
137、ecurities ResearchThe case of Singapore is similar to that in Hong Kong. As at end-2011, the Singaporegovernment introduced a 10% additional buyer stamp duty on overseas residents andcompanies buying properties in Singapore. In addition a 3% stamp duty was levied on localresidents buying multiple pr
138、operties.Table 9: Singapores property control policies as of 13 Jan 11PolicySpecific contentCurrent Previoustax rate tax rateBuyers owning one or more propertieswith outstanding mortgage loan1. Lowered the mortgage ratio ceiling Buyers other than individuals (such60%70%for second property purchaseas
139、 companies, trust funds) owning one or moreproperties with outstanding50%70%mortgage loan2. Raised sellers stamp dutySold in 1 year after the purchaseSold in 1-2 years after the purchase16%12%3%2%Please read the disclaimer at the end of the report1Q072Q073Q074Q071Q082Q083Q084Q081Q092Q093Q094Q091Q102
140、Q103Q104Q101Q112Q113Q114Q111Q122Q123Q12一手房占比（ ）%S1P税后0二手房占比（%）税132013E Annual Investment Strategy PropertyPolicySpecific contentCurrent Previoustax rate tax rateSold in 2-3 years after the purchaseSold in 3-4 years after the purchaseSource: Inland Revenue Authority of Singapore, CITIC Securities Res
141、earchTable 10: Singapores property control policies as of 7 Dec 11PolicySpecific contentOverseas residents and companies purchasing anyproperty in Singapore are subject to a 10% ABSDLaunched Additional BuyersWhen purchasing the second and above property inStamp Duty (ABSD)Singapore, permanent reside
142、nts are subject to a 3% ABSD8%4%20%;The comparison standard is the market performance over the6-month period upon the report issuance day with appreciationsand depreciations of company stock prices (or industry indexes)over the 6-month period upon the report issuance day comparedto S&P/CITIC 300 of
143、the same period as the benchmark;2. Ratings Standard for Investment RecommendationsAppreciations or depreciations of company stock prices (orindustry indexes) over the 6-month period upon the reportissuance day compared to S&P/CITIC 300 of the same period.StockratingsIndustryratingsOverweightHoldOut
144、performNeutralUnderperformRelative performance over CSI 300 Index 5% 20%Relative performance over CSI 300 Index -10% 5%Relative performance over CSI 300 Index -10%;Relative performance over CSI 300 Index 10%;Relative performance over CSI 300 Index -10% 10%;Relative performance over CSI 300 Index -10
145、%;BeijingCITIC Securities Tower, NO.48Liangmaqiao Road, ChaoyangDistrict, Beijing 100125, China.Shanghai22/FL, China Fortune Tower, 1568Century Avenue, Pudong, Shanghai(200122)ShenzhenCITIC Securities Mansion, No.8 ZhongXin San Road, Futian District,Shenzhen(518048)CITIC Securities InternationalComp
146、any Limited26Fl., CITIC Tower, No.1 Tim MeiAvenue, Central, Hong KongForeign Broker-Dealer Disclosures for Distributing to the U.S.This report has been produced in its entirety by CITIC Securities Limited Company (“CITIC Securities”, regulated by the China Securities RegulatoryCommission. Securities
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