Shimao to slash construction area
Shimao Property Holdings will cut its construction area by more than two million square metres in cities facing home-purchase restrictions and increase sales volume to offset a sluggish market.
The company made the announcement after reporting that underlying interim profit rose 39 per cent. Excluding revaluation gains on investment properties, core earnings were 2.27 billion yuan (HK$2.77 billion), up from 1.63 billion yuan a year earlier.
Turnover increased 21 per cent to 12.17 billion yuan, and the company declared an interim dividend of 22 HK cents, up 46.66 per cent from a year earlier.
Jason Hui Sai-tan, Shimao Property vice-president, said properties under development would be reduced to 7.7 million square metres by the end of the year, down from an original target of 10 million square metres.
'We will adopt a standardised approach to ensure developments are built faster and sold faster,' he said.
This included a more efficient development process, he said. The company planned to slash the time between securing a site and putting a project on the market for pre-sale to five months from nine months to a year at present, he said.
Hui said he was confident the firm would meet its 36 billion yuan annual sales target this year despite central government moves to extend restrictions on the home purchases to second and third-tier cities.
The firm managed to achieve 20.9 billion yuan in contract sales as of August 31 even though half of the 34 cities where it had projects were subject to home purchase restrictions, he said.
The central government in January announced eight measures to curb the property boom and, for the first time, required local governments to set targets for average home prices.
Based on guidelines set by Beijing, at least 35 big cities moved to restrict registered residents from buying more than two flats. Last month, the government decided to expand the restrictions to smaller cities where property prices were still rising rapidly.
Taizhou, a so-called third-tier city in the wealthy eastern province of Zhejiang, recently announced home purchase restrictions, becoming the first of the smaller cities to announce such measures. Hui said the firm would release as many as 30 projects for pre-sale next month, which is the traditional peak season for transactions, as it sought to boost sales.
Shares of Shimao Property closed 4.59 per cent higher at HK$8.19.