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China property
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China residential property sector a ‘slow growth market’ now, as sales and profits decline, Beijing steps up cooling measures

  • Sales of residential property were down 2.1 per cent in the first seven months of this year
  • Very clear that limiting cash flow, controlling home prices a long-term national policy, Sunac China founder says

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A construction site in Shanghai. Curbs introduced on the mainland cast a long shadow over major Chinese developers listed in Hong Kong. Photo: Reuters
Pearl Liu

It is tough being a residential property developer in mainland China at the moment. Profits and sales have largely diminished, and only the government’s cooling measures seem to lie ahead for the 16 trillion yuan (US$2.3 trillion) housing market.

The sales of residential property were already down 2.1 per cent to 8.1 trillion yuan in the first seven months of this year, before financing for developers was further tightened last week.

“It is very clear that strictly limiting the money flowing into real estate and controlling home prices will be a long-term national policy, and that cooling measures are unlikely to be relaxed,” Sun Hongbin, the founder and chairman of Sunac China Holdings, the country’s fourth-largest developer, said during an interim results briefing last week, after the tighter curbs on financing were announced.

These curbs also cast a long shadow over the seven major mainland Chinese property developers listed in Hong Kong, which have already reported smaller year-on-year increases in profits and sales – and even declines in some cases – for the first half of 2020.

“It is a fact that the boom in home sales in China is over, and that we are in a slower growth market now. That’s why we have been setting up other businesses, such as commercial property and property management services,” Shao Mingxiao, the chief executive of Hong Kong-listed Longfor Group, said last week after the company reported a 12 per cent year-on-year increase in its half-year core net profit. The company reported a 26 per cent rise for the same period in 2019.

At a symposium held in Beijing on August 20, some property developers and the People’s Bank of China looked at establishing a long-term regulatory framework for the real estate sector, China’s housing ministry, which organised the event, said.

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