Developers stay on target despite austerity threat to sales figures

PUBLISHED : Saturday, 06 November, 2010, 12:00am
UPDATED : Saturday, 06 November, 2010, 12:00am

Developers are expected to achieve the property sales targets they set at the beginning of this year, even though some of them have seen their revenues decline in the last month because of the latest round of austerity measures.

But analysts said developers' liquidity position would be tighter than before in the wake of the central government's measures restricting their access to bank loans.

Developers announced mixed sales results last month.

KWG Property Holding posted a 25 per cent decline in sales of uncompleted units to 750 million yuan (HK$870 million).

Poly Real Estate saw contracted sales down 3.75 per cent month on month to 8.79 billion yuan (HK$10.2 billion) last month.

But China Vanke achieved property sales of 15.51 billion yuan (HK$18 billion) last month, representing a month-on-month increase of 9.15 per cent from September.

Agile Property Holdings said its contracted sales revenue last month amounted to 5.4 billion yuan (HK$6.2 billion), compared with 3.1 billion yuan (HK$3.6 billion) in September.

However, taking the composite figure in the first 10 months, most developers' total sales revenues have nearly reached the forecasts they made at the beginning of the year.

Agile said its contracted sales revenue from January to October this year amounted to 22.6 billion yuan (HK$26.2 billion), 91 per cent of the full-year contracted sales target.

KWG said its sales amount in these 10 months was 10.05 billion yuan (HK$11.6 billion), already passing its sales target of 10 billion yuan for the year.

Longfor Properties, which reported that last month's contracted sales were up 34 per cent month on month to 4.95 billion yuan (HK$5.7 billion), said in the first 10 months the company's contracted sales amounted to 23.67 billion yuan (HK$27.48 billion), accounting for more than 95 per cent of its full-year target.

'[Property] sales so far for most of them are good,' said Samsung Securities (Asia) regional head of property Lee Wee Liat.

'But I think liquidity position will be tighter than before mainly due to tighter loan restrictions and restriction on usage of pre-sales proceeds.'

Developers are under pressure to speed up construction to prevent sites from idling, which can be interpreted as speculation by regulators.

Mainland regulators have reportedly ordered banks to limit loans to real estate developers to 50 per cent of a project's value.