China property

Future Land forecasts continued growth in homes sales next year, even as government bolsters austerity measures

The Jiangsu-based developer its sales of partially built homes will grow 30 per cent in 2017 on year

PUBLISHED : Tuesday, 29 November, 2016, 6:42pm
UPDATED : Tuesday, 29 November, 2016, 10:47pm

Future Land Development Holdings, which bought one of Shanghai’s priciest land sites in July, forecasts a 30 per cent growth in sales of partially built homes next year, even as curbs to cool the property sector remain widespread across the mainland.

Future Land’s sales of these units, dubbed housing contracts, are expected to top 60 billion yuan this year, a year-on-year jump of at least 88 per cent, according to company vice-president Ouyang Jie. A 30 per cent rise in sales, as forecast for next year, will translate into total sales of about 80 billion yuan.

“Growth will inevitably slow in 2017 as austerity measures around the country take effect,” he said. “But we believe an overall weak market could still offer opportunities for developers to grow.”

In the first 10 months of this year, Future Land reported housing contract sales of 54.9 billion yuan, up 130 per cent from the same period in 2015, beating national growth of 42.6 per cent.

It set a full-year sales target of 52 billion yuan in the middle of this year.

Hong Kong-listed Future Land envisions 100 billion yuan in sales of housing contracts in 2020.

If the target is achieved, the Jiangsu-based Future Land will likely be catapulted into the top 10 mainland developers.

In July, Future Land paid a record 3.7 billion yuan, or 67,409 yuan per square metre, for a piece of land in Shanghai’s northern Hongkou district, outbidding more than 10 rivals.

The land price reflected Future Land confidence in the mainland property market, even as authorities have taken drastic steps to cap surging home prices.

More than 20 Chinese cities have recently rolled out cooling measures such as limiting home purchases or raising mortgage down payment requirements to curb the overheated sector.

On Monday, Shanghai became the latest city to join the effort, increasing the down payment ratio to 35 per cent from 30 per cent for first-time homebuyers.

“The new measure is likely to have a short-term impact on the city’s housing market, but Shanghai will remain a hot area where dwellings will become more and more expensive in the mid to long term,” said Ouyang. “We are still confident of the long-term outlook.”

Other analysts were less optimistic.

“Stricter background checks on homebuyers’ mortgage applications, tighter credit controls and the overall negative buying sentiment caused by the policy change may have an impact on the market,” James Macdonald, director of China research at Savills said.

He added that dramatic house price growth has been tempered for the short term.

Future Land boosted its land bank this year as it hoped to build more mixed-use commercial properties nationwide.

“We will rev up our expansion pace in pursuit of our goal of 100 billion yuan in annual sales,” Wang Zhenhua, chairman of Future Land said.

More than 40 mixed-use commercial properties under the brand “Injoy by Future Land” either have made it off the drawing boards and are either completed or under construction.

Wang said the number of Injoy projects would jump to 100 in 2020.