China's property market woes are not over yet



News Desk, Barta24.com
China's property market woes are not over yet

China's property market woes are not over yet

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Chinese real estate stocks have soared over the past month, a dramatic change after almost three years of declines. The shift follows a barrage of announcements from Beijing signaling the end of a long campaign to bring the property sector to heel.

The latest measures have given an immediate boost to many developers, as a select group has received an infusion of 1 trillion yuan ($141.5 billion) in new credit lines from state banks. This compares with a string of previous announcements of property market support over the course of the past year that made little real impact.

But the woes of the Chinese property sector, like those of the nation's economy more broadly, are likely far from over. The fate of the real estate market, as with that of the country's 1.4 billion people, will depend on how and when Beijing ends its zero-COVID policy.

The recently announced measures signal a U-turn of the policy stance adopted by Beijing in 2016. Beginning at that time, the authorities unveiled a series of measures to try to stem rapidly rising home prices.

This culminated in an August 2020 regulation known as the "three red lines," which restricted developers' access to new credit. But the move to curb property companies' overborrowing proved too severe given their longtime reliance on a business model of high leverage for high growth.

A run of high-profile bond defaults that started in mid-2021 tipped China's entire real estate sector into severe financial distress. By last July, more than 30 large developers had defaulted on some $1 trillion in bonds.

The broken real estate sector soon showed its importance to economic growth and social stability.

Over the first 10 months of 2022, land purchases fell around 50% nationally while sales of new homes dropped about 25% and construction completions sank 40%. Given that real estate and related sectors together account for about 30% of China's gross domestic product, the property market crash is expected to drag down this year's overall growth rate by 2-3 percentage points.

Beyond the economic impact, a campaign by homebuyers to halt mortgage payments for units in buildings where developers had stopped construction due to a lack of funds appeared to pose a real threat to social stability as well as to banks' loan books.

This finally prompted the authorities to try to fine-tune their policy squeeze, with an eye toward ensuring the completion of unfinished projects to quench homebuyers' anger while leaving the fate of the developers themselves to the market.

However, this project-based bailout approach was deeply flawed. When developers realized that they would not be helped to escape future bankruptcy this way, they had no incentive to painstakingly manage ongoing projects to ensure timely completion.

As a consequence, the property market continued to deteriorate, with the mortgage boycott movement regaining steam.

The new measures from the People's Bank of China and the China Banking Regulatory Commission take a different tack. In addition to pushing state banks to extend new credit to cash-strapped private developers, the agencies directed lenders to work with borrowers to restructure existing loans. Meanwhile, the China Securities Regulatory Commission reopened a long-closed door for real estate companies to raise funds through share sales.

The new credit stream has allowed many private developers to breathe a sigh of relief as their problem in essence has been an issue of liquidity rather than solvency. Now they have the right incentives to complete presold projects, which will appease existing customers and give some reassurance to potential new homebuyers.

But doubts about the completion of new projects are just one of the concerns keeping homebuyers on the market's sidelines. The country's slowing economy and diminished personal incomes due to the COVID-induced downturn have also been weighing heavily on demand.

China's strict zero-COVID policy is the main culprit behind sluggish real estate demand. Strict quarantine rules and movement restrictions have seriously inhibited economic activity and reduced incomes, in turn making consumers deeply pessimistic about the future and reluctant to commit to home purchases.

The revival of real estate demand will only follow the lifting of COVID restrictions, which at last appears to be on the horizon. But given the authorities' preference for gradualism, it will take a long time for all COVID restrictions to be lifted and the economy put back on the right track.

If everything goes smoothly, real estate demand could bottom out in the second half of 2023. But it is very unlikely the property sector will again match the record reached in 2021 of 1.8 trillion sq. meters in real estate sold.

Moreover, the authorities might need to worry about other legacy problems from the collapse of the real estate bubble.

For one, the supply of new homes has diminished significantly over the past couple years, which could reignite upward price pressure if demand returns. Secondly, lenders still need to worry that many of their loans to private developers could turn bad as the old high growth model will not be back.

China's property tycoons are unlikely to resume their places at the top of the country's wealth ranks. A fresh chapter has begun for the country's real estate sector and this will bring a new set of winners to the fore.

   

Shehbaz Sharif is the new Prime Minister of Pakistan



International Desk, Barta24.com
Photo: Collected

Photo: Collected

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Pakistan Muslim League-Nawaz (PMLN) President and former Prime Minister Shehbaz Sharif has become the new Prime Minister of Pakistan.

Pakistani media Dawn reported that Shehbaz Sharif was elected as the 24th Prime Minister of Pakistan by getting 201 votes in the National Assembly election on Sunday (March 3). And his nearest rival Omar Ayub Khan of PTI got 92 votes.

In April 2022, the coalition government led by Imran Khan's PTI was ousted by the opposition in the National Assembly, the lower house of Pakistan's parliament. Prime Minister Imran resigned. After that, the opposition formed a coalition government in the country under the leadership of Shehbaz Sharif.

National Assembly elections were held in Pakistan on February 8 this year. In this election, no party got the majority to form the government. PTI-backed independent candidates won the most seats. PML-N gets the second highest number of seats. Pakistan People's Party (PPP) was ranked third. ML-N and PPP decided to form a coalition government in alliance.

Apart from the PPP, Muttahida Qaumi Movement-Pakistan (MQM-P) and Inteqam-e-Pakistan Party supported Shehbaz Sharif for the post of Prime Minister. The Sunni Ittehad Council is supporting PTI leader Omar Ayub Khan.

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Israel has accepted a conditional ceasefire agreement in Gaza



International Desk, Barta24.com
Picture: Collected

Picture: Collected

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Israel has conditionally accepted the ceasefire agreement with the Palestinian independence movement Hamas. A senior US official said on Saturday (March 2). Meanwhile, the United States has started dropping relief supplies from the air in war-torn Gaza.

On Sunday (March 3), Qatar-based media Al Jazeera reported this information.

According to the report, the senior US official said that Israel has more or less accepted the ceasefire agreement with Hamas. Now the rest depends on the decision of Hamas.

According to the US administration, the six-week ceasefire agreement between Israel and Hamas will come into effect soon. But its implementation will begin only after the organization agrees to release the most vulnerable hostages held by Hamas and signs the deal.

The cease-fire announcement came hours after a US military cargo plane dropped humanitarian aid into besieged Gaza.

According to the US Central Command, the relief materials that have been given since Saturday include 38,000 packets of food that will ensure the necessary assistance to civilians affected by the ongoing war.

Meanwhile, the United Nations Security Council expressed deep concern about the food crisis in Gaza in a statement on Saturday and called for continuous food aid there.



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For the first time, US has airdropped aid in besieged Gaza



International Desk, Barta24.com, Dhaka
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Photo: Collected

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For the first time, the United States has airdropped aid to Gaza, besieged by the Israel-Palestinian war. More than 38,000 food packets were parachuted from three military planes on Saturday (March 2) afternoon.

According to a report of the international media BBC, after the announcement of President Joe Biden, the relief assistance was given jointly with the Jordanian Air Force.

Joe Biden promised to increase aid on Friday after 112 Palestinians were killed by Israeli forces on Thursday (February 29) when civilians gathered to collect aid in Gaza. The US military dropped food packets the day after the announcement.

The aid came amid a message from a top US official that a deal was in place for a six-week ceasefire in Gaza.

US Central Command said in a statement that on Saturday, C-130 transport aircraft dropped more than 38,000 meals ashore.

Other countries including the UK, France, Egypt and Jordan have previously sent aid to Gaza. But the United States sent food aid for the time.

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Conservatives dominate Iran's parliamentary and assembly elections



International Desk, Barta24.com, Dhaka
Photo: BBC

Photo: BBC

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Amid political and economic challenges, many conservative candidates have won Iran's parliamentary and religious assembly elections. Voting took place from 8 am to 6 pm local time on Friday (March 1). Counting of votes started after 12 midnight local time.

Official primary results on Saturday (March 2) showed ultra-conservatives Mahmoud Nabavian and Hamid Resai in the lead in Tehran's 30 seats in the Iranian capital, Tehran. Then there is 35-year-old Amir Hossain Sabeti, a national television host.

Parliament Speaker Mohammad Bagher Ghalibaf is in fourth place. Longtime lawmaker Mojtaba Jonnour holds a seat in the holy Shiite city of Qom.

President Ibrahim Raisi has renewed his seat in the Council of Experts for the third time with more than 82 percent of the vote in South Khorasan province in eastern Iran.

Meanwhile, followers of moderate politician Ali Motahari, son of the late eminent scholar Murteza Motahari, could not secure a single seat with a majority of the 30 seats in Tehran.

The ultra-conservative Ahmad Khatami, the incumbent imam of Tehran's Friday prayers, has again won a seat in the assembly from Kerman province, and Mohammad Sayedi is the representative of Qaum.

Along with the parliamentary elections, the midterm elections of Iran's Council of Experts were also held on the same day. Voters will elect seven members of the Expert Council. The National Assembly elections are being held across the country, but the Expert Council polls were held only in Tehran, Qom, North Khorasan, Khorasan Razavi and Fars provinces.

The supreme leader, made up of Islamic scholars, will be elected through the election of 290 lawmakers and 88 expert members of the assembly. Seven thousand 148 candidates are contesting 290 parliamentary seats.

Officials are yet to release voter turnout figures for Friday's parliamentary elections. But the Mehr news agency, citing unofficial results, said voter turnout in Tehran was only 24 percent.

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