China Vanke, the country’s top property developer by market value, said it sold 482,000 square meters of property in April worth RMB4.32 billion ($618.16 million), up 39.3% and 73.5% year-on-year respectively.

In the first quarter, the company said in a filing with the Shenzhen Stock Exchange that it sold 1.15 million square meters of property worth RMB10.1 billion, up 82.9% and 119.1% respectively. In March, it sold 719,000 square meters worth RMB6.68 billion, up 147.1% and 227.5%.

So where is the massive property slump of which we are continuously warned?

Two theories, both viable. First it has not yet started to bite. Second, when it does, it will be the smaller companies that will feel the impact the most.

Wang Shi, shown in our illustration is the founder and chairman of Vanke. And, an interesting sidenote, he is a mountaineer of some skill. He climbed Everest in 2003.

In addition, Mr. Wang has climbed to the peaks of the 7 highest mountains on 7 continents, being only one of four native Chinese citizens to have accomplished that feat. He has climbed in Antarctica and lead two expeditions to the Arctic in 2004 and 2005.
Source: China Daily

China Vanke, the nation’s top property developer by market value, has announced that its 2007 net profit more than doubled year-on-year as sales soared.

The Shenzhen-based company said in a statement to the stock exchange that net profit rose 110% to RMB4.8 billion ($681.7 million). Revenues rose 98.3% to RMB35.5 billion as Vanke sold 6.14 million square meters of apartments, up 90% year-on-year. These apartments were worth RMB52.4 billion, or RMB8,532 per square meter, up 30% per square meter from 2006.

Vanke sold 3.23 million square meters in 2006 for RMB21.23 billion.

Vanke’s directorate office explained that figures for apartment sales and revenue differ because some of the sales figures represent progress payments on units under construction and won’t be counted as revenue until construction of the apartments is completed

For some time, the government has been trying to curb rising housing prices, which are adding to the financial pressures on Chinese families. The top economic planner, the National Development and Reform Commission, said that housing prices were rising at a slower pace as macroeconomic tightening policies had begun to pay off in November. Vanke’s figures seem to suggest that there is still some way to go.
Source: China View

Discounts and other incentives are being used to fight shrinking sales of property.

Vanke, the largest developer on the mainland by assets, announced an across-the-board discount of over 5% for 10 of its properties in Shanghai. It is the first time the company offered such a large discount in the city. Vanke is offering even better terms for cash buyers. A sales clerk at one of the company’s offices said those paying the full amount at once will get as much as an 8% discount.

Industry insiders said such a strong promotional offer by a major developer in the city indicates the market will continue to be bleak in the months to come.

Chen Sheng, director of China Real Estate Index System, said many other real estate developers may follow Vanke’s example by offering more discounts.

Shanghai-based Jing Rui Properties has also lowered its prices by offering a 3% discount for group purchases and a 2% discount for those recommended by previous buyers.
Hopson Development, a Hong Kong-listed real estate firm, picked out several apartments for sales promotion in Beijing, cutting down prices from RMB30,000 per sq m to RMB22,500 per sq m.
A project developed by Beijing-based Huayuan Real Estate is offering over 7% discount for those buying small apartments.
Coastal Greenland group, also a Hong Kong developer, reduced its prices for new projects in Beijing, lowering them by around RMB400 per sq m from the average of RMB17,000 per sq m.

Industry analysts said a number of large developers are trying to sell quickly and then take over other projects and smaller developers when the market dives. Some of them, however, are eager to sell off their projects to improve their annual reports.

Zhang Lei, a marketing professional with a developer that has several high-end projects going in Beijing, said, ‘Sales of high-end projects will face a big challenge this year as most buyers are investment-oriented.’
Source: China Daily

As China’s government attempts to cool property prices with limits on lending, developers are in a land grab. The National Bureau of Statistics said Li Ka-shing, who made his fortune in Hong Kong real estate, Chinese billionaire Xu Rongmao (seen in our illustration), who owns Shimao Property, and hundreds of local developers boosted investment 29% in the first eight months of 2007.

Eugene Kim, chief investment officer of Hong Kong-based Tribridge Investment Partners, a $200 million hedge fund, came up with a cheery view: ‘If the government decides to impose further restrictions, most if not all of the developers will go bankrupt, depending on the severity of the restrictions. That makes us very selective in terms of which bonds we buy and the spreads we require to compensate for risk.’

According to a National Development and Reform Commission survey home prices in Shenzhen were 18.6% higher in November than a year earlier. In Beijing the rise was 14.9% and in Beihai, in Guangxi province, 16.4%.

The People’s Bank of China last month raised its benchmark one-year lending rate to a nine-year high and increased reserve requirements to the highest it has been since 1998. In September the government increased the minimum down payments on apartments from 30% to 40%.

Signs of a reaction have started to appear. The nation’s largest publicly traded developer, Shenzhen-based China Vanke, sold property worth RMB4.23 billion ($582 million) in November, 18% less than in October.

Clara Lau, an analyst at Moody’s Investors Service in Hong Kong, said Chinese developers are among the most vulnerable of any group in Asia to downgrades because a slowdown in home sales would deplete cash.

She explained the rush to buy land: ‘They have been growing aggressively, with the view that if they don’t buy now, it will be more expensive for them later.’
Source: Bloomberg

China’s Ministry of Finance has reported a startling 95.5% jump in the profits of state-owned real estate sector in the first nine months of this year.

The leading state-owned property company, Poly Real Estate Group, has reported a revenue of RMB39 billion, and its net profits has risen 83.27% to RMB562 million yuan in the first quarter.
China Vanke collected RMB1.8 billion net profits in the first half.

The State Bureau of Statistics reported a 8.2% increase in house prices of 70 large and medium-sized Chinese cities in August compared with last year.

Other state-owned real estate developers enjoying the property boom include China National Real Estate Development Group Corporation, China OCT and COFCO Property.

China’s state-owned enterprises (SOEs) reported RMB1.2 trillion in profits in the first three quarters, a 31.2% increase over the same period last year.
Source: People’s Daily Online