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Worst not over yet for mainland property market, says China Overseas Land

PUBLISHED : Thursday, 25 October, 2012, 12:00am
UPDATED : Thursday, 25 October, 2012, 4:53am

China Overseas Land & Investment, one of the mainland's largest developers, says the worst is not over yet for the real estate market even though liquidity has improved.

Liquidity was expected to increase but there would not be any significant relaxation in the tightening policies targeting the country's property market, chairman Kong Qingping said in the company's statement on its third-quarter financial and business review.

The company posted an operating profit of HK$18.38 billion on a turnover of HK$42.13 billion in the first nine months of this year. Both rose more than 10 per cent compared with the same period last year.

Kong said there would be good investment opportunities next year and the group, with its strong brand name, would eventually benefit from the consolidation in the mainland property market.

The market has been marked by volatility amid increasing economic uncertainty in the past nine months. China Overseas Land still managed to achieve sales of about 5.9 million square metres, generating HK$91.9 billion.

"The aggregate property sales for the nine-month period have already exceeded the target of HK$80 billion set at the beginning of the year and made up about 91.9 per cent of the revised target of HK$100 billion made in August," Kong said.

He said the transaction volume in the third quarter dropped from the second quarter although home prices and the land market were relatively stable.

Property consultant DTZ also said in its latest report that the traditional high season of property sales in September and October were lukewarm this year.

According to its survey, new homes sales in tier-1 cities dropped 11.7 per cent last month from August while those in tier-2 cities fell 1.6 per cent. The drop in sales was particularly steep in Shenzhen at 33.6 per cent, and Beijing at 20.2 per cent.

Homebuyers have proved themselves to be prudent and price-sensitive and have refused to chase rising prices, according to DTZ.

Overall, prices of new homes in tier-1 cities fell 0.6 per cent last month, while those in tier-2 cities rose 3.9 per cent.

Shares of China Overseas Land yesterday fell 2.1 per cent to close at HK$19.78.

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