China quake to spur property sector consolidation

By Kirby Chien

BEIJING, May 15 (Reuters) - The huge earthquake that radiated destruction from its epicentre in southeastern China on Monday will lead to further consolidation in a fragmented property sector, analysts predict, as safety concerns become paramount.

The worst tremor to hit the mainland in three decades toppled schools and crumpled homes, with death toll estimates as high as 50,000.

As investigators begin looking into claims that shoddy construction may have contributed to the high death toll, analysts say some smaller property firms might be forced to shut down.

"The earthquake will likely raise awareness of safety and accelerate the housing upgrade ...," Tong Tsang of Citigroup Global Markets, said in a research note.

China's property development companies are estimated to number more than 20,000, most provincial or local in scale, which have developed rapidly over the past two decades of rapid economic growth.

"Many of the smaller developers will be driven out," said Ashley Howlett, a partner with law firm Jones Day, who heads the Greater China construction practice.

Citigroup's Tsang said Hong Kong-based developers such as China Resources Land (1109.HK: Quote, Profile, Research) and China Overseas Land & Investment (0688.HK: Quote, Profile, Research) would benefit from any move toward larger, more established firms.

China launched a probe into the high number of schools that collapsed from the earthquake as parents have accused authorities of cutting costs and failing to meet safety standards, state media reported on Friday.