TSLombard with the note:
Property investment slump. Real estate investment is set to slow in H2/21 on tighter credit and higher input costs. Falling land sales will hit local government revenue and investment. Beijing will welcome a property FAI slowdown as officials battle to rebalance the economy and curb soaring China PPI.
After leading the recovery last year, real estate investment is set to decelerate under macro and sector specific deleveraging campaigns and higher input costs. We expect property FAI to reach 3% yoy in H2/21 a record low. The slowdown will affect local government financing and investment. The combined impact on property and local government funding is negative for growth and commodity prices. Nevertheless, we think Beijing will welcome a real estate FAI slowdown, as authorities look to rebalance the post-covid economy and take some of the heat out of PPI.
