Future Land reports property sales gain in June; company chairman and property tycoon Wang Zhenhua under investigation
- Future Land reports 19 per cent increase in contracted sales for June as it wrestles with fallout from former chairman’s arrest
- Contracted sales for June totalled 29.5 billion yuan (US$4.28 billion), representing an area of 2.53 million square metres
Future Land Development Holdings, the mainland developer which lost tens of billions in market capitalisation last week after its former chairman was arrested, reported a 19 per cent rise in contracted sales in June from the previous month, according to a stock market filing on Sunday.
Contracted sales for the month totalled 29.5 billion yuan (US$4.28 billion), representing an area of 2.53 million square metres, up from 24.7 billion yuan and 2.03 million square metres in May, the Shanghai-based property developer said in its unaudited operating statistics for June.
For the period from January to June, contracted sales reached 122.4 billion yuan, up 28.4 per cent from the same period in 2018. Contracted sales area for the period was 10.5 million square metres, representing a gain of 35 per cent on year.
The sales figures come amid difficult times for many mainland developers, who are increasingly being forced to sell new units at losses, or close to cost, to draw buyers and generate cash, amid a clampdown on financing that forms part of the government’s campaign to pare back debt. Government curbs on new home prices are also hurting.
In June, Future Land acquired 11 land parcels for 6.5 billion yuan in cities including Tianjin, Wuxi and Changsha.
The company said it had also won two land parcels, with a combined land area of 107,189 square metres in the northern city of Taiyuan for 1.04 billion yuan through open tender. The two lots are designated for residential and commercial use.
In Anhui, the developer won three adjoining sites, with a combined land area of about 214,900 square metres for 1.03 billion yuan through open tender.
Future Land is wrestling with the fallout from the arrest of its chairman, Wang Zhenhua, who was detained by police on a charge of molesting a child.
The company’s shares plunged in the wake of the news, and have lost HK$33 billion in market value since the arrest was confirmed by Shanghai police last Wednesday.
On Saturday, the Central Political and Legal Affairs Commission, China’s top political body responsible for law and order vowed to bring Wang and anyone else involved in the case to justice.
The development has sent also the company’s bonds plunging, and prompted Moody’s, S&P Global Ratings and Fitch to place it on negative credit watch on Friday to reflect the potential damage to its reputation.
The company said on July 3 it had removed Wang from his role as chairman with immediate effect.
In an example of price discounting by developers, Yanlord Riverbay, a project in Chengdu by Singaporean builder Yanlord Land, recently attracted thousands of applications for 207 new flats priced at 19,000 yuan to 21,500 yuan per square metre. That represents a 25 per cent discount to a prior release in October 2016, and is far below the second-hand homes for sale in the project which currently go for more than 30,000 yuan per square metre.