June 10 (Bloomberg) -- China’s property sales and investment accelerated, adding to signs that growth in the world’s third-largest economy is recovering.

Sales rose 45.3 percent to 1 trillion yuan ($146 billion) in the first five months of 2009 from a year earlier and real- estate investment growth quickened to 6.8 percent, the National Bureau of Statistics said in a statement on its Web site today. Sales grew 35.4 percent in the first four months.

The Shanghai Composite Index has climbed 55 percent this year as investors bet that Premier Wen Jiabao’s 4 trillion yuan ($585 billion) stimulus package, record loans and stronger investment will drive faster economic growth. Gross domestic product grew 6.1 percent in the first quarter, the slowest pace in almost a decade, as exports slid.

“As developers run down inventory rapidly, they will soon start to buy land and increase spending again,” said Frank Gong, chief China economist and strategist at JPMorgan Chase & Co. in Hong Kong. “Property investment, which accounts for 10 percent of China’s GDP and is a trigger for growth in related sectors, will become a strong driving force in China’s recovery.”

Shanghai’s stock index closed 1 percent higher. The China Se Shang Property Index fell 1.6 percent, paring this year’s gain to 116 percent.

Zhang Xiuqi, a strategist at Guotai Junan Securities Co. in Shanghai, said investors were “taking some profit before another run-up.”

China Vanke Sales

China’s consumer prices fell 1.4 percent in May, a separate report showed today, making it easier for the government to keep interest rates low to stoke growth.

The companies benefiting from the revival in property include China Vanke Co., the nation’s biggest listed developer, which said on June 8 that sales in May rose 20 percent from a year earlier.

As part of the stimulus plan, the government has pledged to build 5.2 million low-rent homes over the next three years and subsidize housing for 7.5 million poor urban families by 2011. China last month lowered the amount of funds developers have to put up for property projects to spur construction after cutting transaction costs for home buyers last year.

The 6.8 percent increase in property investment to 1 trillion yuan in the first five months compared with a 4.9 percent gain through April, the statistics bureau said.

Stronger Investment

“Stronger than expected property investment growth means that fixed-asset investment growth in May could surprise on the upside and that investment growth in 2009 may also be stronger than most people expect,” said Sun Mingchun, chief China economist at Nomura Holdings Inc. in Hong Kong.

Urban fixed-asset spending expanded 30.5 percent in the first four months and data through May will be released tomorrow.

A property development climate index rose for a second month in May, after declining for the 16 months through to March, the statistics bureau said.

Land sales in Beijing in May exceeded the total amount sold in the first four months of the year, the China Daily newspaper reported today, citing the city’s land reserve center.

Property sales by value doubled in Beijing, surged 68.5 percent in eastern Zhejiang province and climbed 61.9 percent in Shanghai during the five-month period from a year earlier, the statistics bureau said today. Nationwide, sales by floor area increased 25.5 percent.

Property prices dropped 0.6 percent last month in 70 Chinese cities from a year earlier, the smallest decline in five months. Prices jumped 0.6 percent month-on-month in May, the bureau said.

--Li Yanping, Zhang Shidong. Editors: Paul Panckhurst, Michael Dwyer.

To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net

Last Updated: June 10, 2009 04:17 EDT