China’s new home price growth slows as big cities decline

Home price growth began to slow in the second half of 2017 as the Chinese government sought to deal with bubbles in its property markets, following almost two years of rapid expansion. (Reuters)
Updated 19 March 2018
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China’s new home price growth slows as big cities decline

China’s new home price growth slowed in February from the previous month as a raft of government curbs aimed at tempering speculative demand softened prices in the biggest cities, although strength seen in smaller centers remained intact.
Average new home prices in China’s 70 major cities rose 0.2 percent in February from the previous month, compared with an increase of 0.3 percent in January, Reuters’ calculations from National Bureau of Statistics (NBS) data on Monday showed.
Compared with a year ago, they rose 5.2 percent in the month, picking up from a 5.0 percent increase in January.
Prices fell in China’s top-tier cities after they stabilized in January, the NBS said in a statement accompanying the data, without giving a specific figure.
Shenzhen’s new home prices fell 0.6 percent month-on-month, after it stabilized in January. Beijing prices declined 0.3 percent after posting a 0.2 percent increase in the previous month, data showed.
“I think the policies currently in place (to curb speculation) are effective in a way that they made prices fall slightly in prime markets,” said ING economist Iris Pang.
“But they also result in a spillover effect that drives buyers who can’t afford in those big cities to less expensive markets, which will continue to push up prices,” she said, adding that she doesn’t expect significant price falls in the biggest cities, despite the curbs.
The majority of the 70 cities surveyed by the NBS still reported monthly price increases for new homes although the number has dropped from the previous month. Forty-four cities reported higher prices in February, down from January’s 52.
The declines in the four top-tier cities contrast with a steady rise in prices in China’s vast spread of smaller cities. The fastest price gain was seen in Nanchong, a lower-tier city of about 6 million in Southwestern China’s Sichuan province, where values of new homes rose 1.7 percent on-month in February.
Price growth in tier-3 cities in general was unchanged from January, the NBS said, without giving details.
China removed sales prices for affordable housing in its January calculations, which prevents like-for-like comparisons with growth data before 2018.
Home price growth began to slow in the second half of 2017 as the government sought to deal with bubbles in its property markets, following almost two years of rapid expansion.
Property sales have shown signs of easing in recent months despite expectations of a spike in demand as developers ramp up promotions during the week-long Lunar New Year holidays when migrant workers head home.
But analysts have remained optimistic about demand in smaller tier-3 and tier-4 cities thanks to favorable government policies aimed at reducing inventories.
Authorities are seeking to balance attempts to support real economic activity with efforts to rein in risks from an increasingly complex financial system.
Household loans — mainly mortgages — increased by 275.1 billion yuan in February, well below expectations and sharply down on January’s record of 901.6 billion yuan.
Policymakers have vowed to push the stable and healthy development of the property market this year, emphasizing that homes are for living in, not speculative investment.
China will focus more on providing affordable housing and developing the rental market, Premier Li Keqiang announced earlier this month.
The country is also steadily pushing for a property tax law this year and expect it completed by 2020.


NMC Health’s $450 million bond to boost Saudi expansion

Updated 40 min 11 sec ago
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NMC Health’s $450 million bond to boost Saudi expansion

  • The new capital structure — which will feature a mixture of unsecured bank and bond financing — will aid the company’s continued growth into Saudi Arabia.
  • The company first secured a foothold in the Kingdom in 2016 after acquiring a 70 percent stake in As Salama Hospital in Al-Khobar.

LONDON: The UAE-based private health care operator NMC Health has launched a $450 million senior unsecured guaranteed bond to help pay off an existing $1 billion bridge facility and support its expansion plans into Saudi Arabia.

The earlier bridging loan was part of the $2 billion capital structure refinancing put in place at the start of the year, the company said.

The bond is due in 2025 and is convertible into ordinary shares. JP Morgan is the sole bookrunner on the issuance. Bonds will have a fixed coupon rate of 1.875 percent, paid semi-annually.

The new capital structure — which will feature a mixture of unsecured bank and bond financing — will aid the company’s continued growth into Saudi Arabia, with NMC having been one of the first private health care providers to capitalize on the Saudi government’s health care privatization plans.

The company first secured a foothold in the Kingdom in 2016 after acquiring a 70 percent stake in As Salama Hospital in Al-Khobar.

Since then, NMC won regulatory approval last September for a new long-term care facility, the Chronic Care Specialty Medical Center, in Jeddah. It is though to be the first greenfield medical facility in the Kingdom to be set up by a non-Saudi company.

Earlier this year, NMC said it acquired an 80 percent stake in the Riyadh-based Al-Salam Medical Group.

NMC’s acquisition-led expansion strategy aims to ensure the company retains its recently-won place on London’s FTSE 100 index. It was one of the first Middle Eastern companies to join the index when it qualified last September. It first listed on the London Stock Exchange in 2012.

The company posted strong growth in the last year, reporting $209.3 million in net profit for 2017, an increase of 38.2 percent on the previous year. The company paid out a total of $641 million in acquisitions last year.

“2017 proved to be a year of tremendous achievements for NMC,” said the firm’s chief executive Prasanth Manghat, in a statement in March.

NMC also secured secured its first public ratings of BB+ with a stable outlook from S&P on April 20, while Moody’s gave the firm rating of Ba1 with a stable outlook on April 20, 2018. The bonds are not expected to be rated.

“The company continues to strive to meet self-imposed standards that are higher when compared to what is expected of it by various regulators. This approach supports in turn its resilient business model, loyal customer base, strong brand recognition and market leading position,” according to a statement from Moody’s Investors Service.

Investors are so far reacting favorably to NMC’s strategy, with the company closing at a record high on April 20, according to Bloomberg reports, with a market value of $10.8 billion.

The company is now one of 24 equities in the region to have achieved a market capitalization of more than $10 billion, the report said.

Healthcare is seen as a lucrative sector in the Gulf due to its relatively wealthy population becoming increasingly at risk of problems related to obesity and diseases such as type 2 diabetes.