CBRE has launched a research market flash on the recent People’s Bank of China (PBOC) rate cut, and its impact on real estate.
May 10, 2015 the People’s Bank of China (PBOC) cut the one-year benchmark
lending rate and deposit rate by 25 bps to 5.10% and 2.25%, respectively. The
rate cut was the third in less than six months and comes as leading indicators
suggest that growth momentum in the world’s second largest economy remains
report finds that:
-The recent rate cuts will benefit the
Chinese residential sector in the near term, but could hinder the government’s
efforts to rebalance the economy away from investment and property to domestic
-Meanwhile, multinational corporations
in China remain cautious towards expansion due to slower economic growth and
increasing competition from domestic firms. Domestic firms in contrast show
-In spite of the recent weak economic
data, CBRE believes China should be able to navigate through the current
challenges to avoid a hard landing.
Frank Chen, Head of Research, China at CBRE
The government has relaxed its grip on the
residential property sector in recent quarters in a bid to help stabilize the
housing market, and data and anecdotal evidence both point to this strategy
having been effective; faltering prices look to have stabilized and transaction
volumes in tier I and major tier II cities look to have rebounded. This latest
rate cut, along with the booming A-share market and improving liquidity will
likely help support the further recovery of the residential market in the
However, while the series of recent rate cuts will
benefit the residential sector in the near term, they could undermine the
government’s efforts to improve housing affordability in major cities. More importantly,
the over-dependence on the property sector to drive GDP growth is unlikely to
abate in the near future. This could hinder efforts to rebalance the economy
away from investment and property to domestic consumption.
Meanwhile, for office leasing, multinational
corporations in China remain cautious towards expansion due to slower economic
growth and increasing competition from domestic firms. In contrast, Chinese
companies continue to display robust demand for office space and are expanding
steadily. We’re expecting office leasing demand from Chinese companies to
steadily increase in the coming years as China gradually develops into a
consumption-driven and service-oriented economy.
Dr. Henry Chin, Head of Research, Asia Pacific, at
Overall, we expect that China should be able to
navigate through the current challenges to avoid a hard landing; its one-year
benchmark rate and RRR are still among the highest of major economies,
inflation remains low at around 1.2% as of Q1 2015 and authorities still have
significant room for further policy easing. Moreover, recent new initiatives
including the "Asian Infrastructure Investment Bank (AIIB)" and
"One Belt One Road" will serve as new drivers for the country’s
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.