BEIJING, Nov 25 (Reuters) - China's real estate market will begin to recover in the second half of 2009, aided by easier government policies and rising investment demand, advisers CB Richard Ellis (CBG.N: Quote, Profile, Research, Stock Buzz) (CBRE) said on Tuesday.
"One would hope that sentiment will recover sometime in 2009, and that we'll get a more positive sentiment in the residential sector sometime between the middle and end of 2009," said Chris Brooke, the global property services provider's chief executive for Greater China.
The outlook for property, which accounts for about a quarter of fixed investment, is critical for the overall Chinese economy.
The World Bank on Tuesday cited a depressed real estate market, along with faltering exports, to explain why it had lowered its 2009 growth forecast.
China's real estate market began to falter late last year.
The number of transactions has tumbled and high-end prices in some cities such as Shenzhen have fallen as much as 40 percent.
Nationwide, property inflation slowed to 1.6 percent in October. As recently as March, prices were rising at a double-digit pace compared with a year earlier. [ID:nPEK158104]
However, Brooke told reporters that some investors are looking at buying opportunities, tempted by a strong economic growth outlook in the medium term, attractive valuations in some areas and developers' hunger for funding.
Brooke said he expected to see deals closing in 2009.
Private equity fund manager Gaw Capital Partners is looking to raise up to $1.5 billion for Chinese property, while ING Real Estate is marketing a $750 million fund it wants to launch in the first quarter of next year. [ID:nB586508]
"We do see increasing demand from developers looking for investment partners and we see continued interest in the China market from the investors," Brooke said.
CBRE, which competes with peers such as DTZ (DTZ.L: Quote, Profile, Research, Stock Buzz) and Jones Lang LaSalle (JLL.N: Quote, Profile, Research, Stock Buzz) in China, has just set up a capital markets team to meet such demand.
However, Brooke said investors would wait to see whether China's stimulus package succeeds in stabilising the real estate market and whether general sentiment in the United States and elsewhere improves, enabling them to secure funds.
China unveiled a 4 trillion yuan ($586 billion) stimulus package on Nov. 9 to spur domestic growth. The authorities have also slashed taxes, down payments and mortgage rates to boost the real estate sector.
"It really depends on how effective the government measures are in terms of the stimulus package and of the relaxation measures the government is introducing to the regulatory framework," Brooke said.
The European Union Chamber of Commerce in China said on Tuesday that prospects for European companies in the near term would depend mainly on whether the government is able to jump-start the property sector.
Separately, the China Real Estate Chamber of Commerce, a semi-governmental association, said the impact of the policies had yet to be seen; it expected growth in property investment would slow further this quarter.
The group said developers would be forced to cut prices to ease cash flow strains and it forecast a rise in vacancy rates next year as projects underway came onto the market. (Reporting by Langi Chiang; Editing by Alan Wheatley and Sharon Lindores)