Top China developers set for strong sales

HONG KONG: China’s large developers are tightening their hold on the country’s real estate market, capturing an ever-larger share even as sales growth is expected to slow and worries about debt persist.

According to US investment bank Citi, the top 10 China developers are forecast to achieve close to 35 per cent market share this year, up from around 27 per cent now. They held just 14.2 per cent of the market in 2012.

The number of developers posting more than 50 billion yuan (RM30.7 billion) in sales increased to 40 last year from 25 in 2016, with sales growth of 53 to 84 per cent, real estate developer CREIS said. The number of smaller developers, with sales between 10 billion and 50 billion yuan, fell to 104 from 106.

And although the total number of home transactions is expected to drop about five per cent, securities firms and rating agency analysts said Hong Kong-listed developers could see 30 per cent sales growth on average this year, compared with 40 per cent last year. But the growth will not be without risk. Ramped-up land purchases mean the developers will add debt, throwing uncertainty into the stated plans of some to deleverage.

China Evergrande and Sunac China had the highest gearing ratios at more than 200 per cent in the first half of last year. Both said in October they intended to reduce their debt ratio, but neither halted their buying sprees.