China's top developers plan to invest more in land this year - Reuters survey www.reuters.com

Chinese real estate developers surveyed by Reuters mostly plan to increase their land investments in 2017 as they shrug off record prices and government tightening measures while seeking to expand their market share.

The 10 companies contacted by phone and messaging represent half of the top 20 Chinese developers and together have close to $300 billion in annual sales, mainly of apartments.

Eight of them said they were increasing their budgets, by between 10-50 percent, and the other two said they would sustain their spending at 2016 levels. Company officials responding to the survey asked for anonymity, many citing corporate quiet periods ahead of quarterly results.

The developers are buying land in Tier 1 cities, which are Beijing, Shanghai, Guangzhou, and Shenzhen, or in Tier 2 cities, such as Suzhou, Wuhan and Hefei, but most are shunning smaller Tier 3 and Tier 4 cities. That could increase the price differential between the major cities, where demand is robust and land is in short supply, and the rest.

A sharp run-up in prices in major cities last year raised official alarm in Beijing about the potential for a boom and bust cycle, and led to a series of measures at local level to reduce property speculation.

"Because of the tightening, home sales will not be as crazy as in 2016, but it's a good time for us to buy more land because we sold most of the inventory last year," said a company official at one developer based in the southern city of Shenzhen, where home prices are among the most expensive in China. "Developers need to keep the growth momentum and so we need to keep buying aggressively ... The theme for this year is land investment."

Increasing market share helps the big players to gain more economies of scale, putting them in a better position to control labor, materials and marketing costs.

Companies are snatching up land amid intensifying competition that is expected to squeeze out some of the country's smaller players. Citi estimates China's top 20 developers will control 45 percent of new home sales before 2020, up from 26 percent in 2016.

The plans for more land buying contrast with expectations for a slowdown in the growth in overall national real estate investment in 2017, compared with a 6.9 percent rise last year. The Chinese Academy of Social Sciences forecasts China's property investment will rise 5.4 percent in 2017.

Increasing competition for land in major cities will not only pose a challenge to authorities who want to avoid property prices from soaring out of control, but also put pressure on companies' profit margins due to caps imposed on home prices in some cities.

The developer that plans to invest 50 percent more in land this year said it was making up for failing to buy enough in the past two years.

The two developers surveyed who said they would keep investment levels similar to 2016 said they believed land prices were already too high.

SHOPPING SPREE

China's property market, which contributes around 15 percent of the country's economic growth, has become increasingly unbalanced, with higher tier cities recording record prices while smaller ones struggle to reduce inventories.

China Vanke, the country's No.2 homebuilder with 88 percent growth in sales value in January from a year earlier, said it had bought 19 new projects last month, two of which were in Beijing.

"In cities where tightening measures are in place, sales may see pressure, but this pressure may also bring opportunities for us to acquire land. Even though the absolute prices of land haven't dropped significantly, the premiums have narrowed," Vanke securities affairs representative Liang Jie (000002.SZ) told an analysts' conference last week.

Explaining why the lesser cities weren't a focus, the chief financial officer of a large developer said that "prices there are not good and demand is not good."

Two developers, Evergrande and Country Garden, are bucking the trend by developing around half of their projects in third and fourth-tier cities as they have in the past.

Country Garden has the most aggressive sales target for this year, with a plan to double sales to close to 600 billion yuan.

There are no price caps in these cities, and by keeping land prices and construction costs low, there is less pressure on margins, Country Garden's Chief Financial Officer Bijun Wu told reporters last month.

If China's property prices continue to rally, the developers' aggressive buying strategy could prove right.

"Evergrande's active land acquisition in 2013-15 via auction/M&A turned out be a successful move given the sharp appreciation on the land price and the much higher competition in the land market now," Citi analyst Oscar Choi said in a report early this month.

Still, there are concerns that some of the developers are overstretching.

"Land prices will continue to increase if local governments keep lowering supply; but once monetary policy starts to tighten, those developers that have invested excessively will face (liquidity) problems," said Nomura's chief China economist Zhao Yang.

(Reporting by Clare Jim; Editing by Anne Marie Roantree and Martin Howell)

UK offshore wind 'will lower energy bills' more than nuclear www.theguardian.com

Australia's $5 billion bet on clean coal www.mining.com

The Australian government has opened the door to using a $5 billion fund designed to attract investment in northern Australia, to develop clean-coal projects.

The Northern Australian Infrastructure Facility (NAIF), introduced last year, would offer loans of at least $50 million to projects in undeveloped regions of northern Australia, which covers 40% of the Australian continent but hosts just 5% of the population. But Resources Minister Matt Canavan stirred some controversy when earlier this month he suggested the fund could be tapped for clean-coal projects.

While federal ministers are suggesting that "ultra super critical" coal-power stations should be considered because they emit 30% less emissions than older coal plants, critics pan the idea, on both environmental and commercial grounds. 
Clean coal refers to a collection of technologies that mitigate the environmental impacts of coal-generated electricity, including carbon capture and sequestration. While there are a number of demonstration projects in place throughout the world and especially in the United States, the technology is still relatively nascent.

"I've received some interest over the past week associated with our commitment to build base load power stations, including to support clean coal options," Canavan told ABC News. He also cited a report stating that clean-coal power stations could be commercially viable in the north. "Some people might not realise that in North Queensland there is no base-load power station north of Rockhampton and industrial consumers in north Queensland pay often up to double the prices in southern Queensland," ABC News quoted him saying.

The minister's position is in line with the executive branch of the Australian government, which is framing a debate around energy security following recent blackouts.

Last week 90,000 customers of electricity provider Engie lost power when the company failed to switch on its Pelican Point gas plant during a heatwave. In September 1.7 million residents of South Australia were left in the dark after two tornadoes destroyed critical infrastructure.

Energy security in Australia has been thrust into the limelight with the closures of coal-fired power plants, including the Hazelwood power station. In 2015 AGL Energy Ltd, one of Australia’s main electricity providers, said it will shut all of its existing coal-fired power plants by 2050 to curb greenhouse gas emissions. Australia's No.2 power retailer added it would never again build or buy any coal-fired power plants, unless they come equipped with a carbon capture and storage facility.

The government has invested some $590 million in clean-coal technology since 2009, but Australia has yet to have a low-emissions power station.

While federal ministers are suggesting that "ultra super critical" coal-power stations should be considered because they emit 30% less emissions than older coal plants, critics pan the idea, on both environmental and commercial grounds.

According to a report in The Guardian, the federal government's Clean Energy Finance Corporation says clean coal is "seriously challenged" as a commercial investment because the prices of renewable energies are declining. Moreover, the environmental benefits of clean coal are being questioned. Updated data reported by RenewEconomy shows that government estimates of emissions from ultra super critical plants are actually above the current Australian average, and that there is little difference between emissions from the clean-coal plants proposed by the government and emissions from regular coal plants that currently exist in Australia.

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