(finance.sina.com.cn) According to the news on December 27, industry participants from wealth management and investment institutions had a discussion concerning the economic development trend and investment orientation on the fortune forum held in Wuhan. Wang Jingbo, CEO of NOAH said that real estate developers supported by real estate funds would prevail in the future as the regulation enters into a deep-water zone. 

Since the new round of real estate regulation on January 26, 2011, relevant policies have come into a play. Cities with housing price falling on a month-on-month basis have gradually increased since October. As the data newly released by the National Bureau of Statistics of the People’s Republic of China display, there were 49 cities with housing price declining on a month-on-month basis among 70 large and medium-sized cities in November, presenting an obvious downtrend in housing price. 

Wang Jingbo said, under current economic situations, risks existed in real estate industry in a short period. The currently increasing number of cities with falling housing price and inventory of unsold houses indicated that under the influence of housing purchase restriction and credit crunch, developers were exposed to a lot of pressure in the matter of sales, cash flow and price.  

However, in term of development in the next 6 to 10 years, she thought that the long-term trend in real estate was upward. As home buyers applying mortgage loans occupy more than 60% in the housing loan structure of China, the long-term risk in the industry was not so high with high saving rate and low debt ratio. The expanding urban population, increasing income and scarce land composed the supporting factors in the industry for a long term. 

According to Wang Jingbo, for the current regulation, changes would happen to the development mode that the real estate industry relied too much on the credit. “I think that heavy concentration of credit support in any industry will compose a potential risk in the whole financial system. Under this circumstance, developers supported by real estate funds will stand a chance to win in the future.”

From her analysis, the real estate fund had a long period, stable capital resource and relatively free issuance, helping to solve the capital shortage in the real estate industry due to credit crunch. Meanwhile, the continuing government regulation will make the hosing price tend to be stable, rental yield increase and securitization products like REITs to be introduced in favor of the development of real estate funds.

Due to the foresaid reasons, she reckoned that the real estate industry dominantly supported by credit would gradually develop into one supported by funds in the future. The cross-period real estate funds would support the continuing and healthy development of outstanding developers while the investment chance would center on real estate funds for some time in the future.

This forum was co-organized by UMIC and NOAH, on which industry participants from NOAH, Sequoia Capital and South Korea SK Group and financers, entrepreneurs and representatives of chamber of commerce from Wuhan conducted a discussion on the economic development trend and future investment orientation. (By Ding Wen in Wuhan)