China property sales decline narrowed in April, Morgan Stanley stays cautious

Investing.com -- Contracted sales for China's 25 major property developers tracked by Morgan Stanley fell 9% year-over-year in April, according to CRIC data, narrowing the year-to-date sales decline to 31% year-over-year.

The brokerage firm said it remains prudent about the durability of sales performance in top-tier cities.

Top 50 and top 100 developers' attributable sales declined 6% and 10% year-over-year in April, compared with drops of 20% and 19% in March. This brought year-to-date sales declines to 19% and 21% year-over-year, respectively.

State-owned enterprises continued to outperform in April. CR Land (HKG:1109), CMSK, Jinmao (HKG:0817), COLI (HKG:0688), and C&D (HKG:1908) posted year-over-year gains of 50%, 47%, 26%, 20%, and 19%, respectively.

In contrast, CIFI, Midea RE, Longfor, Seazen (SS:601155), and Zhongliang recorded declines exceeding 40% year-over-year. Semi-SOE developers Vanke and Gemdale saw sales fall 58% and 43% year-over-year.

Morgan Stanley attributed SOE outperformance to stronger brands and more new saleable resources in top-tier cities.

The firm noted that while secondary home sales in top-tier cities have been stronger since March, the recovery spreading to more cities remains unclear.

Morgan Stanley recommended investors monitor primary and secondary sales volume, home prices, rental rates, and secondary listing volume in May through July.

The firm maintains its selective approach, favoring CR Land, Seazen, and C&D. Should strong sales continue, COLI and Jinmao may also outperform given their larger exposure in Tier 1 cities, the brokerage said.

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