Top Chinese developers lower growth expectations for 2018

Top Chinese developers that released their annual results on Monday have set modest sales targets for this year amid a less sanguine outlook under financial restrictions introduced by Beijing, and the pursuit of better margins to woo capital markets.

China Evergrande Group and China Overseas Land and Investment have set relatively modest contracted sales targets for 2018 compared with their robust performance last year. China Evergrande has set a target of 550 billion yuan (US$87.57 billion), compared with the 501 billion yuan it made last year. China Overseas is targeting HK$290 billion (US$36.95 billion), on the back of HK$232.07 billion last year.

Country Garden, China’s largest developer by sales value, earlier revealed no specific sales target for this year, and only said it would try its best.

“If we seek 800 billion yuan in sales this year, it is also possible [to hit]. But it is unnecessary, because we have said we want to focus on profitability,” Hui Ka-yan, chairman of Evergrande, said after the company’s results were released.

Gaining from a property boom in China last year, particularly in tier-three and tier-four cities, 10 of the country’s biggest developers by market capitalisation have reported an average increase of 56 per cent in contracted sales, but the industry consensus is that it was less likely to maintain this momentum in 2018, because of strict buying restrictions and credit tightening. Most listed developers have flagged this risk in their annual results.