New York Stock Exchange-listed developer Xinyuan Real Estate (NYSE:XIN) announced on Friday that its contracted sales had dropped to $273.9 million in the first quarter of this year, a 53 percent fall compared to the same period last year, and a 27.4 percent slide compared to the fourth quarter of 2013.
The sales reversal for the Chinese property firm shows the ongoing challenges facing even the country’s largest developers during the current market slowdown.
Despite the signs of vanishing revenues, Xinyuan continued to snatch up new land plots in China’s second-tier cities during the quarter.
Revenues and Income Also Declining
In addition to Xinyuan’s sales decline, a statement from the company revealed that revenues totalled $226.4 million, a 21.7 percent decrease from the US$289.2 million recorded in the fourth quarter of 2013 and a 33.6 percent increase from the US$169.4 million reported in the first quarter of 2013.
Regarding the company’s ability to maintain its income, Yong Zhang, Xinyuan’s Chairman pointed out that they had not yet joined other developers who have rushed to discount their prices in the face of the slowing market. “Importantly, we did not reduce prices at our available units in the first quarter,” Zhang commented.
At least in the case of the company’s revenue numbers, Xinyuan still exceeded expectations, having earlier predicted that revenues would reach just $197.5 million during the period.
Net income was US$10.1 million, a 68.0 percent decrease from the US$31.6 million the company achieved in the fourth quarter of 2013 and a 62.0 percent decrease from the US$26.6 million reported during the same period last year.
Significantly, the volume of sales by floor area actually increased compared to the first quarter of 2013, rising 2.0 percent to 124,600 square metres, although the total GFA still represented a 47.4 percent slide from the volume of sales in the fourth quarter of last year.
Developer Profits Down Across the Country
Xinyuan’s struggles appear to be typical of the nation’s property developers, who are suffering one of the most pronounced slowdowns since the 1990s.
According to an independent survey of China’s real estate industry performance in the first quarter of 2014, the total net profits of the country’s 142 listed real estate companies declined 5.36 percent compared to the same period of last year, totalling RMB 11.74 billion ($1.88 billion).
In all, 74 of the surveyed companies reported shrinking net profits, as the industry comes to grips with tighter credit conditions and more cautious buyers.
Still Acquiring More Land
During February Xinyuan spent RMB 1.29 billion to acquire new land in Chengdu and Sanya, and in March it announced a RMB 688.9 million site acquisition in Changsha. When developed, the projects will add up to 611,600 square metres of space to the real estate markets in the second-tier cities.
Xinyuan should be able to count on some additional revenues, as well as a significant publicity boost during the current quarter, however, as the company revealed that it will begin pre-sales of its Oosten housing development in Brooklyn’s Williamsburg area later this month.