China property prices to stabilise in 2H 2009 - CBRE

BEIJING, June 16 (Reuters) - Chinese property prices will stabilise over the rest of 2009, supported by the government's stimulus measures, advisors CB Richard Ellis said on Tuesday.

Real estate prices rose 0.6 percent in May from April, the third consecutive monthly increase.

Along with a rebound in property transactions and investment, the price rise triggered a debate over whether the Chinese real estate market, which faltered in late 2007, is now recovering.

"We do not see significant upward movement, nor a falling trend" in property prices, said Andrew Zhu, senior managing director of CBRE in Shanghai.

An investment yield of less than 4 percent would keep investors away from the residential property sector, preventing excessive price rises, he said.

But Beijing's stimulus policies, low mortgage rates and strong end-user demand would support prices, Zhu said.

Transactions peaked in March or April, said Chris Brooke, CBRE's newly-appointed president and chief executive officer in Asia.

"So far we are seeing reasonably well-sustained transactions in May and June," Brooke said. "We need to see that continue in July, August or September to make sure that it is sustainable." Meanwhile, many developers, including Vanke (000002.SZ) and Guangzhou R&F Properties (2777.HK), have started to buy land.

Beijing last month cut the equity capital requirement ratio to further spur real estate investment.

Some industry observers are worried that a fresh asset bubble is brewing in China's real estate sector, driven by enormous liquidity in the market.

Brooke dismissed that concern, saying developers were buying land mainly because prices were reasonable now and they needed to replenish land banks after no purchases in 2008.

"I guess the government will be watching carefully to see that prices are not increasing rapidly and I think the local governments will also manage the land supply carefully," he said.

(Reporting by Langi Chiang and Lucy Hornby, editing by Mike Peacock)

((yan.jiang@thomsonreuters.com; +8610 6627 1207; Reuters Messaging: yan.jiang.reuters.com@reuters.net))

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