Mingtiandi

Asia real estate and outbound investment news

  • Facebook
  • LinkedIn
  • RSS
  • Twitter
Sign Up / Login Logout

Lost your password?
Register
Forgotten Password
Cancel

Register For This Site

A password will be e-mailed to you.

  • Capital Markets
  • Events
    • Mingtiandi 2022 Event Calendar
    • APAC Residential Forum 2022
    • Asia Logistics Forum 2022
    • Asia REIT Forum 2022
    • APAC Data Centre Forum 2022
    • Singapore Focus Forum 2022
    • Office Strategies Forum 2022
    • More Events
  • MTD TV
  • People
  • Logistics
  • Data Centres
  • Asia Outbound
  • Retail
  • Research & Policy
  • Advertise

15 Out of China’s Fifty Top Developers Lost Money in 2015

2016/01/28 by Michael Cole Leave a Comment

Song Guangju Poly Real Estate

Poly chair Song Guangju was one of the lucky developers to eke out a profit last year

China’s government has made reviving investment in the property sector a top target for 2016, but Xi Jinping and friends may have a tough year ahead of them after nearly a third of the country’s top developers lost money in 2015.

A total of 15 of China’s 50 mainland-listed builders are expected to report a loss for last year, according to a report published last week in the official Beijing Times, and nearly half of those locally listed firms saw profits decline compared to the previous year.

The slowdown in China’s property sector has been pegged as a major contributing factor to sluggish growth in the overall economy, and the government has recently stated that selling off an overhang of unsold homes is a primary priority for the economy in the new year.

Rising Land Prices and Slowing Sales Squeeze Developers

Although home sales recovered strongly in China’s biggest metro areas during the second half of 2015, developers still found their profits squeezed by rising land prices, as competition increased for the few available plots in first-tier cities.

After starting the year in a policy-induced slump, average home prices were up by 1.6 percent nationwide in China last year compared to the end of 2014, according to figures from the National Bureau of Statistics, with prices in Shenzhen rising by more than 40 percent over the same period.

However, the housing recovery was not enough to rekindle profits, even for some of China’s largest developers.

State-owned Poly Real Estate, which ranks in the top five for home sales on the mainland each year managed to make profits of RMB 12.3 billion ($1.9 billion) last year on sales of RMB 123.5 billion, according to a recent report in the China Daily. However, although revenues grew by 12.75 percent for the year, the developer reported that profits were up by only 1.18 percent.

Poly was lucky, however, as it was one of only 12 mainland-listed developers to report any profit at all. 23 out of the 50 developers said that their profits had declined.

The problem for Poly, as it is for many builders in China, is the rising cost of land.

In November of 2015 major developers including Country Garden, China Resources Land and China Merchants Land all backed away from land parcels that they had recently won at auction after concluding that they might not be able to profitably build and sell homes on the sites.

In China, local governments control sales of land and often restrict supply in order to squeeze the maximum revenue out of sales of building sites.

Government Facing Challenges in Reviving Real Estate Industry

The difficulty in achieving profits in the mainland’s housing industry has been one of the factors driving outbound investment by Chinese developers, and this could prove to be a challenge as China tries to sell down its record backlog of unsold homes.

According to data released by the National Bureau of Statistics, the number of unsold new homes nationwide increased 14 percent to 437 million square metres by the end of October, which led the government to make selling down this backlog a major priority at its Central Economic Work Conference in December.

The bureau’s numbers showed that property investment, a crucial driver of the economy, grew just 1.3 percent in the first 11 months of 2015 from a year earlier. This rate was the slowest recorded since early 2009 and is seen by many as a major factor in top-line GDP growth falling to just 6.9 percent for the year.

However, with developers struggling to make a profit on their existing projects, the government’s challenge in reviving investment now looks that much harder.

Share this now

  • LinkedIn
  • Share
  • Tweet
  • Email

Filed Under: Finance Tagged With: crebrief, highlight, Poly Property Group

Leave a Reply

Your email address will not be published. Required fields are marked *

Get Mingtiandi Delivered

Data centre forum 2022 Web banner

MTD TV

Allianz, SC Capital, BW and JLL Talk Asia’s New Logistics Real Estate Reality: MTD TV
MTD Korea Logistics
Investors Confident in South Korea’s Logistics Market Despite Headwinds

More MTD TV Videos>>

People in the News

jesline goh UOL
Jesline Goh Resigns as CIO of Singapore’s UOL as Developer Promotes Hotel Chief
Lee Hoon KIc
Asia Real Estate People in the News 2022-08-15
daigo Hirai BlackRock
Asia Real Estate People in the News 2022-08-08
Bryan Southergill
Ares Hires Bryan Southergill to Run Asia Real Estate Business

More Industry Professionals>>

People in the News

Jesline Goh Resigns as CIO of Singapore’s UOL as Developer Promotes Hotel Chief

jesline goh UOL

Jesline Goh is stepping down as chief investment and asset officer of Singaporean developer UOL Group after nearly five … Read More>>

Asia Real Estate People in the News 2022-08-15

Lee Hoon KIc

Senior personnel changes in Korea, Hong Kong and Singapore lead Mingtiandi’s roundup of HR moves from around the region … Read More>>

Asia Real Estate People in the News 2022-08-08

daigo Hirai BlackRock

BlackRock’s appointment of a new head of Japan real estate leads this week’s roundup of personnel moves from around the … Read More>>

Ares Hires Bryan Southergill to Run Asia Real Estate Business

Bryan Southergill

After more than eight years leading real estate investments for KKR in Asia, Bryan Southergill has taken on a new role … Read More>>

More Industry Professionals>>

Latest Stories

CICC Huang Zhaohui
CICC Expands into Kowloon’s ICC as Hong Kong Banking Evolves
Tom Ko C&W
$409M Project Sale in Hong Kong’s Causeway Bay Linked to Shenzhen Developer
Singapore Private Home Sales to Slide After July Surge as Supply Dwindles

Sponsored Features

Douglas Wu Fairland Holdings
How a Hong Kong Mall Repositioning Boosted Revenue by Focusing on Community
For Hong Kong’s Office Market, Border Reopening Holds Key to Unlocking Demand
Top 3 Trends Driving a Connected Experience in Commercial Real Estate

More Sponsored Features>>

MTD-QR-Code-320

Connect with Mingtiandi

  • Facebook
  • LinkedIn
  • RSS
  • Twitter

Real Estate News

  • Capital Markets
  • 2022 Event Calendar
  • MTD TV Archives
  • People
  • Logistics
  • Data Centres
  • Asia Outbound
  • Retail

More Mingtiandi

  • About Mingtiandi
  • Contact Mingtiandi
  • Mingtiandi Membership
  • Newsletter Subscription
  • Advertise
  • Terms of Use
  • Privacy
  • Join the Mingtiandi Team


© 2007-2022 China Advertising Media Ltd (Samoa). All rights reserved.