2010-06-04 08:56

A residential property project developed by Vanke in Fuzhou, Fujian province. Despite falling sales, the price of new residential apartments in Beijing remains firm. Zhang Bin / for China Daily

Property firm taking advantage of lower prices to boost its assets

BEIJING - China Vanke Co Ltd, the country's largest property developer, is still actively seeking land parcels despite recent market tightening policies, the company's top management said on Thursday.

"We are continuing to look at opportunities to increase our land bank, especially in second- and third-tier cities," said Xiao Jin, marketing chief of Vanke Beijing.

Last month, Vanke purchased five parcels in Beijing, Hangzhou, Guiyang and Xi'an, among which two parcels were sold at the basis price and the other three were sold at a price premium of less than 10 percent.

Ge Haifeng, general manger of the data center at China Index Academy, said now is a good opportunity to grab land parcels as the government has boosted land supplies while land prices are falling.

"Though some property developers may be more cautious on purchasing land because of market uncertainties and increasing difficulties in financing, cash-rich listed real estate firms should take it as a good opportunity to increase their land bank at a lower cost," Ge added.

According to China Real Estate Top 10 Research, the net debt ratio of mainland-listed property developers stood at 41.1 percent in the first quarter, up 8 percentage points from the end of 2009, indicating increased debt risks.

In terms of property prices, Xiao said there is downward pressure in Beijing's real estate market and property developers will change their marketing strategy accordingly. But he declined to reveal Vanke's sales strategy.

China Business said on Tuesday that Vanke plans to lower its sales prices at the end of June due to low transactions, citing unnamed sources.

According to Beijing Real Estate Transaction website, new apartment sales fell 48.6 percent in May, and those of pre-owned houses plummeted 57 percent.

Despite falling sales, the price of new residential apartments in Beijing remains firm, apart from discounts offered in Tongzhou and Wangjing where prices soared the most in the first quarter of this year.

"Along with shrinking sales, the price drop will accelerate in the second half of the year," said Ge. "Though we see little possibility of the government launching more tightening policies in the short term, we believe the price correction will be finished quicker than in 2007."