Khamis, 21 November 2013

The Star Online: World Updates

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The Star Online: World Updates

Chinese property developers target bigger families in smaller cities


HONG KONG (Reuters) - Chinese developers such as China Overseas Land & Investment Ltd and Country Garden Holdings Company Ltd are likely to build bigger apartments in smaller cities to take advantage of Beijing's new urbanisation drive.

The vast majority of land these companies have purchased for development is in medium-sized cities with fast-growing economies, known as Tier 2 and Tier 3. China has more than 50 cities that fit that description, many of them in the Pearl River Delta and western China, home to thousands of factories feeding the country's vast, labour-intensive export business.

Those cities, with populations up to 10 million, are expected to see an influx of potential property buyers in the coming years after China announced last week that it was revising its hukou residency registration system. Under existing rules, migrant workers who move to cities for jobs are not eligible for social services and cannot buy real estate.

As the policy is gradually eased, allowing more migrants to own property and tap social services, about 100 million people will likely move into cities over the next 17 years, according to rating agency Moody's.

"There are great opportunities in second-tier capital cities," said Liu Zhuogen, executive director at Tonic Industries Holdings Ltd, a Hong Kong-listed overseas platform for mainland developer China Merchants Property Development.

"They have more room for growth and lower risk," he said.

His company is focusing on medium-sized cities in the Pearl River and Yangtze River deltas but avoiding smaller non-capital cities because of concerns about oversupply.

Before the policy changes were announced last week, many mainland developers were holding back, in part because of worries that Beijing would crack down on real estate speculation that has driven up prices in major cities.

The biggest developers were sitting on $25 billion in cash as of midyear, giving them plenty of money to ramp up construction now that the policy shifts are becoming clearer.

China Overseas Land, Country Garden and Shimao Property Holdings Ltd each have more than 93 percent of their land banks in smaller cities, according to BNP Paribas, putting them in pole position to benefit.

The companies did not respond to requests for comment.

More than 90 percent of the new land that China Vanke Co Ltd and Evergrande Real Estate Group Ltd acquired last year was in second- and third-tier cities, research firm Lucror Analytics says.

"Developers are moving into smaller cities in China, either by choice or by force," the research firm wrote in a note to clients.


Over the past three years, property developers have concentrated on major cities along the wealthy eastern and southern coasts, avoiding small cities for fear of over-supply. But as empty land becomes scarce, they have ventured into less crowded markets, and the hukou reforms are making those small cities popular once again.

The next phase of development will shift further west, following the manufacturing industry that is moving inland in search of cheaper labour.

Longfor Properties Co Ltd has 36 percent of its land bank in western China, and 37 percent in the Bohai Rim area surrounding Beijing and nearby Tianjin. Greentown China Holdings Ltd has about one-third of its land around Bohai Rim and another third in Zhejiang province, a coastal region bordering Shanghai.

"From a longer-term perspective, developers definitely have to deploy in Tier 2 and Tier 3 cities if they want higher profit margins," said Lina Wong, China investment services managing director at real estate services company Colliers.

"If developers want to catch the demand, they can go to Tier 2 and Tier 3 cities and design their products according to the needs of farmers who first move to the city."


Last week's economic and social reforms also included easing China's one-child policy, which is expected to provide a double benefit for developers as some parents upgrade to larger units. The policy shift will translate into about 9.5 million additional babies over the next five years, BofA Merrill Lynch says.

"Relaxation of one-child policies should boost upgrade demand. Mid-size property units of 90-140 square meters should benefit the most from this," said Wee Liat Lee, property analyst at BNP Paribas.

While many analysts said larger families will spur upgrade demand and mitigate the downside risk to property demand, some cautioned that the shift could take time. That is reflected in the stock prices of Chinese property developers, which have seen little benefit from the reform news.

Shares of Country Garden have slipped 7.2 percent since Friday, when the reform plans were unveiled, while China Overseas Land has risen 1.5 percent and Evergrande has gained 2.5 percent. That compares with a 5.9 percent gain for the index of Chinese companies listed in Hong Kong.

"(The reform) is good news. Developers will take this factor into consideration and launch more three-bedroom units," Colliers' Wong said.

"But there is still a long way to go. They may decide to buy the house 20 years after now."

(Editing by Anne Marie Roantree and Emily Kaiser)

North Korea marks attack anniversary with threat on South's president


SEOUL (Reuters) - North Korea marked on Friday the third anniversary of an artillery attack on a South Korean island with a vow to respond to what it called any similar provocation with a strike on the South Korean presidential compound.

North Korea fired scores of artillery shells at South Korea's Yeonpyeong island on November 23, 2010, killing four people including two civilians in one of the heaviest attacks on its neighbour since the Korean War ended in 1953.

It took many months for tension between the rivals to ease but it spiked again in March this year, during annual joint military exercises by the South and the United States. The North, which has conducted three nuclear tests, threatened nuclear attacks against the allies.

The hostility has cooled since then but the bellicose message on the anniversary of the island attack is a reminder of the unpredictability of the North.

"Three years ago the retaliatory blow was confined to the Yeonpyeong island only but this time Chongwadae and other bases of the puppet forces will be put within striking range," said a spokesman for the North's military, according to the North's KCNA news agency.

The South Korean presidential compound in Seoul is known as Chongwadae in Korean and the Blue House in English.

The North has threatened to attack Seoul before but it is seen as highly unlikely as doing so would almost certainly trigger all-out war with the South and the United States which, under a defence treaty, stations 28,500 troops in the South.

In 2010, the North said it was provoked into attacking Yeonpyeong, which is off the peninsula's west coast, because of a live-fire South Korean exercise in the area that dropped shells in its territorial waters.

Earlier in 2010, the North was widely blamed for infiltrating a submarine across the border and sinking a South Korean navy ship with a torpedo killing 46 sailors.

North Korea denied that.

South Korea has strengthen its military presence in the area since 2010 with the deployment of GPS-guided missiles. It has vowed to strike back if hit again.

The maritime border, called the Northern Limit Line, separating the waters off the west coast, was unilaterally drawn at the end of the 1950-53 Korean War by the U.N. forces that fought for the South.

The North does not recognise the line and has demanded a redrawing of the demarcation. Naval clashes do erupt every now and then and sailors on both sides have been killed.

(Reporting by Jack Kim; Editing by Robert Birsel)

Thousands protest against tough new official secrets law in Japan


TOKYO (Reuters) - Thousands of people protested in Tokyo on Thursday against a proposed secrets act that critics say would stifle information on issues such as the Fukushima nuclear crisis.

The law, proposed by Prime Minister Shinzo Abe's government, would significantly broaden the definition of official secrets, which Abe says is vital for strengthening security cooperation with main ally the United States and other countries.

Tough secrecy regulations before and during World War Two have long made such legislation taboo, but the law is expected to pass when it comes to a vote next week, given the comfortable majority the ruling coalition has in both houses of parliament.

"Without the right to know, democracy cannot exist," said Yasunari Fujimoto, from the Peace Forum citizen's group, who spoke at the protest in a park near parliament.

"If this law comes to pass, our constitution is nothing more than a scrap of paper."

Critics say the law would prevent journalists from investigating official mistakes, such as the collusion between regulators and utilities that contributed to the 2011 Fukushima nuclear disaster.

Under the new law, public servants and others cleared for access to such information could get up to 10 years in prison for leaks. At present, they face one year imprisonment except for defence officials, who are subject to up to five years in prison or 10 years if the data came from the U.S. military.

Journalists and others in the private sector who encourage such leaks could get up to five years in jail if they used "grossly inappropriate" means to encourage leaks.

Protesters packed into a 3,000-seat outdoor theatre in the park, with people standing in the aisles and spilling out into the park. Some held signs saying "Don't take away our freedom."

Organisers put the turnout at around 10,000.

Abe insists the law is also essential to his plan to set up a U.S.-style National Security Council.

Legal and media experts say the law is too broad and vague, making it impossible to predict what would come under its umbrella. The lack of an independent review process leaves wide latitude for abuse, they say.

"This law is absolutely unacceptable. We have a right to know everything," said Akio Hirose, a 54-year-old transport worker.

"After all, we are the voters."

(The story has been filed again to correct paragraph 7, clarifies in paragraph 8 that penalties are up to 10 years, not up to five years, and add comparison with the existing law.)

(Writing by Elaine Lies; Editing by Robert Birsel)


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