Shanghai Real Estate, which specialises in developing middle-and upper-income residential projects in China's commercial capital, said net profit almost quadrupled in the six months to June to HK$302.44 million from HK$77.8 million a year earlier. The company, however, said most of the gains came from flats that were sold last year but booked this year. The firm, with a land bank of more than 1.4 million square metres in Shanghai, began diversifying away from its home base only last month when it bought a 51 per cent stake in a residential project being built in Shenyang. Its dependence on one of China's hottest property markets makes it highly vulnerable to government efforts to rein in development. The latest crackdown since May is not likely to show any negative impact on Shanghai Real Estate for some months so for now at least, the results look good. Thanks to strong demand for luxury homes in Shanghai, the company said sales soared to HK$2.19 billion in the first half from HK$441.17 million a year earlier. Gross profit margin was unchanged at 46 per cent while earnings per share jumped to 16.8 HK cents from 5.5 HK cents. 'The encouraging result was attributable to the sale of three residential projects in 2005,' said chairman Shih Jian. These were the upmarket residential developments Richgate, CentraRing Centre and Cedar Island, all in Shanghai. Mr Shih said that sales of flats were strong in the first half, generating HK$1.2 billion mainly from the Albany Oasis Garden, Cedar Oasis Garden and Richgate Oasis Garden developments. He expects a further boost in the third quarter from a new phase of the Albany Oasis Garden project. He tried to put the government clampdown in a positive light, saying restricting new developments would only drive up prices of existing residential projects as demand for high-end flats remained strong. He added that the company would continue to diversify outside Shanghai after spending 200 million yuan for its stake in Shenyang Huarui Shiji Investment Development. That project will have a gross floor area of 1.6 million square metres on a 161,000 square metre site. The firm's shares yesterday closed down three HK cents to HK$1.79.