China Overseas Land & Investment

China Overseas Land tops 20b yuan in mainland sales

PUBLISHED : Friday, 28 December, 2007, 12:00am
UPDATED : Friday, 28 December, 2007, 12:00am

China Overseas Land & Investment, the Hong Kong-listed flagship of the mainland construction ministry, logged more than 20 billion yuan in mainland property sales this year, up more than 50 per cent from the year-ago level.

It credited the bonanza to the property boom, mainly in the first three quarters.

The company had sold 2.5 million square metres of gross floor area on the mainland so far this year, chairman Kong Qingping said. The figure exceeded the original forecast of 2.2 million square metres.

Last year, the company reaped more than 13 billion yuan from the sale of 1.7 million square metres of gross floor area. Its projects sold at an average of more than 9,000 yuan per square metre, up more than 1,000 yuan per square metre from 2005.

Mr Kong said he expected home prices in major cities such as Guangzhou and Shenzhen to consolidate for 'a period of time' after sharp rises this year.

The market would need to take a breather amid the state's austerity measures to rein in the housing sector, he said.

'Home prices in Guangzhou and Shenzhen will not see any upward momentum next year. They will follow the pattern of the Shanghai housing market's performance,' Mr Kong said.

In Shanghai, after almost three years of consolidation, both transactions and prices started picking up this year.

Mr Kong also expected the pace of growth of the Beijing property market to slow.

But China Overseas Land was not expecting to see a drop in property sales as prices of its projects in inland cities such as Chengdu and Chongqing continued to rise, which would offset slower sales in major cities, Mr Kong said.

China Overseas Land, which joined the Hang Seng Index this month, has built up a huge property portfolio in 19 mainland cities.

'Many measures have been launched and more will be launched to regulate the sector. But I believe the market will continue to perform well in the long run as real home demand still exists,' Mr Kong said.

Guotai Junan Securities property analyst Dennis Yao agrees. He noted that prices of some China Overseas Land projects in Shenzhen had been adjusted but still fetched a lot more than their development costs.

Projects in Shenzhen and Guangzhou accounted for only 15 to 20 per cent of the company's portfolio.

Any reduction in sales volume would be easily offset by projects in other cities, he said.

Mr Yao expected net profit this year to increase 40 to 50 per cent but that growth next year could slow to 20 to 30 per cent.