THE “golden era” of China’s real estate market is over, but the government’s urbanization drive will continue to drive demand for the next 15 years, according to China Vanke Co., the nation’s largest property developer.

    After climbing at double-digit rates through most of last year, home prices in China started cooling in late 2013, with the annual growth in average new home prices slowing to an 11-month low in April as a sustained campaign to clamp down on speculative investment and easy credit gained traction.

    “The golden era of the housing market is over, and it’s now a silver era,” Vanke president Yu Liang said at the firm’s research and development center in the southern Chinese city of Dongguan on Monday. “Vanke will take a cautiously optimistic approach to face the slowdown and target those buyers who need homes for self-use.”

    Yu said the real estate sector’s outlook remained healthy thanks in part to urbanization.

    “The industry is now after quality and service and back to real demand...The industry was worth 8.1 trillion yuan (US$1.30 trillion) last year, even growing at a single-digit rate, it’s still large enough for us.”

    Vanke will have sales promotions from time to time but won’t implement widespread discounts, Yu said. “As a Chinese developer, cutting prices is a dangerous activity,” he said. “Earlier homebuyers may come to trash the showroom, or surround our offices.”

    Yu said he believed government measures to curb speculation in the property sector had worked and prices were now more sustainable.

    “I don’t agree there’s a bubble. Since the tightening measures in 2008, financial leverage of developers and individual investors has dropped significantly,” Yu said.

    Analysts said the latest land transaction prices have shown that the market is becoming more rational.

    “Land sales in first-tier cities weakened in April as housing prices softened. It’s important for developers to time and source the land purchase better because land cost is a big factor to determine margins,” said Kim Eng analyst Karen Kwan.

    Tan Huajie, Vanke’s board secretary, said cities a level below the richest enclaves like Beijing and Shanghai — commonly called tier-two cities — face oversupply and pressure to clear inventory.

    “We expect some property developers to cut back land purchases and slow construction starts,” he said.

    But, he added, “average housing prices in China will be steady this year.” He cited 2014 sales so far this year as better than during the same time as the last real estate slump in 2012. “So things are not that dire,” he said.

    The growth in the real estate industry will slow and the phase where “whoever buys makes money” is gone, even as China’s accelerating urbanization still promises bright prospects for the market, Vanke chairman Wang Shi told Caixin, a financial news company, in an interview last month.

    Vanke is in the process of securing a listing in Hong Kong and has secured regulatory approval to convert its Shenzhen-listed B shares to Hong Kong-listed H shares.

    It currently requires at least two-thirds of its B-shares investors to agree to convert their holdings for a successful listing in Hong Kong, where it would get better access to global capital markets.

    Yu said Vanke aims to be listed in Hong Kong as soon as late June and he said the company doesn’t have any financing plans after the listing.

    (SD-Agencies)