Evergrande Real Estate Group (HKG:3333) announced this week that it had set a new record for sales revenue in June, reaching RMB 13.1 billion. The strong sales by the top five Chinese developer appears to demonstrate the growing split between the fortunes of China’s largest developers and many small and medium-sized real estate companies during the country’s current market slowdown.
In a statement released on July 7th, Evergrande indicated that the company’s contracted sales for the first six months of this year totalled a record RMB 69.32 billion – 55.4 percent more than what the company achieved during the January through June period of 2013. June sales were up 10.9 percent compared to the same month of 2013.
During the first half of 2014, the Guangzhou-based developer has already achieved 63 percent of its RMB 110 billion sales target for the year.
Transactions Volumes Also on the Rise
At least some of Evergrande’s improved sales performance appears to come from an increase in transaction volumes for both the month of June, and for the first half of the year. In the past month, contracted sales area increased 10.2 percent compared to last year to reach RMB 1.57 million square metres. The figure for the first half of the year reached 9.8 million square metres, up 47.4 percent from 2014 and also a record for the company.
Evergrande Sales Parallel Vanke’s Performance
The strong sales year for Vanke appears to parallel the performance of one of its primary competitors, China Vanke – the country’s largest developer by sales.
According to a statement released by Vanke on Friday the Shenzhen-based real estate company reached contracted sales of RMB 19.4 billion during June, making it the second biggest sales month in the company’s history.
For the first half of the year, Vanke’s contracted sales outstripped Evergrande’s to reach RMB 101 billion – an increase of 20.6 percent compared to the same period last year.
The strong sales for the industry giants, when shown on the background of buy-out Greentown China, or the collapse of developers in Ningbo, Shanghai and Hangzhou, appear to show a trend towards consolidation in the industry.
Many analysts have predicted that China’s tightened credit situation, when combined with lower demand for new homes would force many developers out of business, a trend which the government has been encouraging for several years.