Home » Business » Real Estate
Debt woes as firms struggle to sell properties
Source: Xinhua |
May 9, 2011, Monday
|
Print Edition
Print Edition
WITH the government's ongoing and persistent efforts to cool the red-hot property market, Chinese property developers are struggling to sell properties while becoming more encumbered with debt.
The debt of the country's property developers rose 41.27 percent year on year to 1.05 trillion yuan (US$162 billion) by the end of March, Wind Information, a Shanghai-based financial data provider, said in a recent report.
Of 113 listed property developers that had filed their first-quarter reports to Chinese stock exchanges, 25 posted losses and 42 registered slower profit growth from January to March. Most of them are small and medium-sized property developers.
The country's top three property developers - China Vanke, Poly Real Estate Group Co and the Gemdale Corp - also saw moderate declines in profit growth during the period.
"The recent government control over its property market has restrained half of the demand. Small property developers will feel the pinch first," said Zhang Dawei, an analyst at Beijing-based Centaline Property.
By the end of March, the 113 listed property developers surveyed saw the value of their unsold houses rise 40.21 percent annually to 903.5 billion yuan while revenues fell 4.86 percent to 54.65 billion yuan in the period, data from Wind showed.
The April data was also not encouraging. China Vanke, the country's biggest property developer by market value, reported a moderate sales increase in April, up 1.3 percent year on year to 7.9 billion yuan compared to 9.33 billion yuan in March.
Tan Huajie, the company's board secretary, attributed the dwindling growth to the government's tightening measures.
"The government control has an evident effect on the property market as transactions slow. As property supply rises in the future, the sector's inventory will also rise, adding to sales pressure," Tan said.
Most developers had adopted a wait-and-see attitude toward the real estate market and postponed sales of newly-built apartments in the first quarter of the year.
"In order to have more cash on hand, property developers may adjust their prices and adopt fast sales strategies to launch more new property projects in the coming months," said Yang Guohua, real estate analyst at Shanghai-based Orient Securities.
The Chinese government has repeatedly stressed its efforts to rein in the runaway property market since last year and adopted measures including implementing tighter monetary policies, raising down payments, banning third-home purchases and imposing price control targets and a trial property tax.
The National Development and Reform Commission, the country's top economic planner, has regulated that property developers must sell homes at marked prices starting May 1 in its latest effort to contain property prices.
The move aims to tackle public complaints over a lack of transparency in commercial property pricing. But 11 property companies in Beijing were found to have violated the regulation, according to a ministry statement last Thursday.
Despite these efforts, prices remain stubbornly high. Home prices in 100 major cities across the country rose 0.4 percent from March to April with 77 cities witnessing month-on-month increases, said a report by China Real Estate Index System.
"The persistent fever might force the government to implement tougher control policies later this year as ongoing measures are mostly meant to regulate the new-homes market," Zhang said.
This view was shared by the Chinese Academy of Social Sciences, a government think tank.
"It's very likely for the government to increase holding costs for people who already have several units of houses," said the CASS in an annual report concerning the real estate sector. It also indicated that the government should extend the property tax to more Chinese cities.
The property tax is being tried out in Chongqing in southwest China and Shanghai on east China's seaboard.
"Property taxes will help cool the market," said the report, adding that it will also encourage local governments to change from depending on sales of land for revenues.
The report indicated that this dependence is thought to be a primary reason for high property prices.
The debt of the country's property developers rose 41.27 percent year on year to 1.05 trillion yuan (US$162 billion) by the end of March, Wind Information, a Shanghai-based financial data provider, said in a recent report.
Of 113 listed property developers that had filed their first-quarter reports to Chinese stock exchanges, 25 posted losses and 42 registered slower profit growth from January to March. Most of them are small and medium-sized property developers.
The country's top three property developers - China Vanke, Poly Real Estate Group Co and the Gemdale Corp - also saw moderate declines in profit growth during the period.
"The recent government control over its property market has restrained half of the demand. Small property developers will feel the pinch first," said Zhang Dawei, an analyst at Beijing-based Centaline Property.
By the end of March, the 113 listed property developers surveyed saw the value of their unsold houses rise 40.21 percent annually to 903.5 billion yuan while revenues fell 4.86 percent to 54.65 billion yuan in the period, data from Wind showed.
The April data was also not encouraging. China Vanke, the country's biggest property developer by market value, reported a moderate sales increase in April, up 1.3 percent year on year to 7.9 billion yuan compared to 9.33 billion yuan in March.
Tan Huajie, the company's board secretary, attributed the dwindling growth to the government's tightening measures.
"The government control has an evident effect on the property market as transactions slow. As property supply rises in the future, the sector's inventory will also rise, adding to sales pressure," Tan said.
Most developers had adopted a wait-and-see attitude toward the real estate market and postponed sales of newly-built apartments in the first quarter of the year.
"In order to have more cash on hand, property developers may adjust their prices and adopt fast sales strategies to launch more new property projects in the coming months," said Yang Guohua, real estate analyst at Shanghai-based Orient Securities.
The Chinese government has repeatedly stressed its efforts to rein in the runaway property market since last year and adopted measures including implementing tighter monetary policies, raising down payments, banning third-home purchases and imposing price control targets and a trial property tax.
The National Development and Reform Commission, the country's top economic planner, has regulated that property developers must sell homes at marked prices starting May 1 in its latest effort to contain property prices.
The move aims to tackle public complaints over a lack of transparency in commercial property pricing. But 11 property companies in Beijing were found to have violated the regulation, according to a ministry statement last Thursday.
Despite these efforts, prices remain stubbornly high. Home prices in 100 major cities across the country rose 0.4 percent from March to April with 77 cities witnessing month-on-month increases, said a report by China Real Estate Index System.
"The persistent fever might force the government to implement tougher control policies later this year as ongoing measures are mostly meant to regulate the new-homes market," Zhang said.
This view was shared by the Chinese Academy of Social Sciences, a government think tank.
"It's very likely for the government to increase holding costs for people who already have several units of houses," said the CASS in an annual report concerning the real estate sector. It also indicated that the government should extend the property tax to more Chinese cities.
The property tax is being tried out in Chongqing in southwest China and Shanghai on east China's seaboard.
"Property taxes will help cool the market," said the report, adding that it will also encourage local governments to change from depending on sales of land for revenues.
The report indicated that this dependence is thought to be a primary reason for high property prices.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
