Economy

Property developers struggle as govt cools market

(Xinhua)
Updated: 2011-05-09 11:02

BEIJING -- 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 ($61.53 million) by the end of March, the 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 reported profit losses and 42 registered slower profit growth rates from January to March. Most of them are small- and medium-sized property developers.

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The country's top three property developers including 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 first feel the pinch," said Zhang Dawei, an analyst with the Beijing-based Centaline Property.

Inventory pressure rises

By the end of March, unsold houses of 113 listed property developers surveyed rose 40.21 percent year on year to 903.5 billion yuan while revenues fell 4.86 percent to 54.65 billion yuan during the period, data from Wind Information shows.

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 in comparison to 9.33 billion yuan in March.

Tan Huajie, the company's board secretary, attributed the dwindling growth to government's tightening measures.

"The government control has an evident effect on the property market as transactions slow. As property supply increases in the future, the sector's inventory will also rise, adding to the 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 with Shanghai-based Orient Securities.