Lead­ing de­vel­op­ers ex­pected to un­veil bullish earn­ings

China Daily (Canada) - - COMPANY SPECIAL - By WANG YING in Shang­hai wang_y­ing@chi­nadaily.com.cn

In the first 2013 earn­ings es­ti­mate re­leased by ma­jor de­vel­op­ers, Poly Real Es­tate Group said on Thurs­day that its 2013 net profit will have surged 27.63 per­cent yearon-year to reach 10.77 bil­lion yuan ($1.78 bil­lion).

Poly Real Es­tate, China’s sec­ond- largest prop­erty de­vel­oper, is ex­pected to gen­er­ate 92.3 bil­lion yuan in rev­enue for 2013, up 34 per­cent year-on-year.

The Shang­hai-listed real es­tate gi­ant sold 10.64 mil­lion square me­ters of gross space area in 2013, ris­ing 18.11 per­cent from the pre­vi­ous year, with a to­tal value of 125.3 bil­lion yuan.

Poly Real Es­tate ended 2013 with a stellar per­for­mance in De­cem­ber, ac­cord­ing to the firm’s an­nounce­ment. It has signed pur­chase con­tracts of 1.04 mil­lion sq m of res­i­den­tial space, up 21.22 per­cent year-on-year. The con­tract value to­taled 14.2 bil­lion yuan, up 46.2 per­cent from a year ear­lier.

An­a­lysts said ro­bust sales in first-tier city prop­erty mar­kets will boost earn­ings re­sults for most ma­jor de­vel­op­ers.

Ac­cord­ing to Guangzhounews­pa­per New Ex­press, China Vanke Co, the coun­try’s big­gest prop­erty de­vel­oper, is fore­cast to post 170 bil­lion yuan rev­enue in 2013 af­ter sell­ing 14.9 mil­lion sq m of space in 2013, sky­rock­et­ing from the an­nual rev­enue of 100 bil­lion yuan three years ago.

“The 100 bil­lion yuan an­nual sales club mem­ber num­ber has ex­panded from one in 2010 to seven in 2013 — and the team is likely to have at least one new mem­ber in the com­ing year,” said Zhu Yiming, a re­search man­ager with China Real Es­tate In­for­ma­tion Corp.

Listed de­vel­op­ers’ sales growth for 2013 should be above 20 per­cent, ac­cord­ing to Dai Fang, an in­dus­try an­a­lyst with Zhe­shang Se­cu­ri­ties.

Dai’s es­ti­mate is shored up by the lat­est fig­ures from the Na­tional Bureau of Sta­tis­tics, which showed that a to­tal of 6.99 tril­lion yuan of res­i­den­tial prop­er­ties were sold na­tion­wide from Jan­uary to Novem­ber, up 30.7 per­cent year-on-year.

In Shang­hai alone, the sales vol­ume of res­i­den­tial hous­ing in the pri­mary mar­ket reached 12.9 mil­lion sq m in 2013, up 36 per­cent from 2012, ac­cord­ing to in­ter­na­tional real es­tate ad­vi­sory com­pany Jones Lang LaSalle Inc.

Com­pared with 2013’s ro­bust sales and am­bi­tious prop­erty de­vel­op­ment, an­a­lysts said the com­ing year will be less dra­matic.

An­a­lysts es­ti­mate the new tight­en­ing mea­sures an­nounced in ma­jor cities are likely to weaken mar­ket sen­ti­ment in the sales mar­ket and re­sult in a de­cline in sales vol­ume in 2014 in both mass and high-end mar­kets.

How­ever, the up­ward trend in sales prices is not likely to be re­versed, al­though price growth is ex­pected to be lim­ited in 2014.

A slew of lo­cal gov­ern­ments is­sued new prop­erty curbs as soar­ing hous­ing mar­kets put their 2013 pricerise tar­gets ever fur­ther be­yond the reach of many in late 2013.

Dai ex­pected the na­tion­wide sales growth rate will de­cline to be­tween 10 and 15 per­cent this year. Zhu be­lieved most de­vel­op­ers will see their profit mar­gins head down­ward.

“It is likely that a new ver­sion of the prop­erty tax will be an­nounced in the sec­ond half of the year and it will re­place the ex­ist­ing tight­en­ing poli­cies to play the role of a long-term macro con­trol­ling pol­icy for the prop­erty mar­ket,” said Wu Huimin, di­rec­tor of res­i­den­tial with DTZ East China.

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