Realty sector on steady growth track

Project quality, customer services and better management key drivers for firms

A total of 19 real estate developers in China said their sales revenue exceeded 100 billion yuan ($15.47 billion) in the first half, which experts said was not only due to the low base in COVID-19-savaged 2020, but also led by China's strong recovery and stabilization of the sector's performance.

The nation's 100 largest real estate companies saw average sales revenue from January to June soar 40 percent year-on-year to 69.3 billion yuan despite tightening measures on land and financing. Their combined market share hit 56.6 percent, according to data collected by the China Index Academy.

Compared to a year ago, there are six more developers whose half-year sales revenue surpassed the 100 billion yuan mark. Some 132 companies saw their sales revenue at or above 10 billion yuan, 25 more than the year-ago level.

"Facing fierce competition and restrictions imposed to stabilize the property market, most real estate firms actively adjusted marketing strategies to further explore market demand," said Hui Jianqiang, head of research at Beijing Zhongfang-Yanxie Technology Service Ltd.

"Their performance indicates the great demand in China, and the resilience of leading property developers."

Hui said the sector's leaders grabbed a larger share of the market, while the less competitive companies lost ground if they did not come up with new measures to compete.

The top four real estate firms－Country Garden, China Evergrande, China Vanke and Sunac China－each reported more than 300 billion yuan in first-half sales revenue.

With an eye on the market's latest trend, the 15 companies with sales revenue between 100 billion yuan and 300 billion yuan shifted business focus on city clusters like the Yangtze River Delta region, the Guangdong-Hong Kong-Macao Greater Bay Area and the Beijing-Tianjin-Hebei region.

A total of 23 firms saw their revenues range between 50 billion yuan and 100 billion yuan, which were mostly reported to tap into the commercial property market and the renovation of urban areas.

Nearly 90 percent of the developers have achieved more than 40 percent of their whole year target, with 25 having completed more than half of their sales revenue target by the end of June, said Ding Zuyu, CEO of E-House (China) Enterprise Holdings Ltd.

Despite the cheerful first-half sales numbers, the performances of listed property developers in the capital market is not as bright. Some 118 out of 170 companies or 69.4 percent saw their market value go down. Their combined market value shrank about 8.7 percent to 340 billion yuan in the first six months, a China Times report said citing data from Leju.com.

Also, as the sector was hardly hit by the COVID-19 last year, property developers tended to set more conservative goals for this year, said Liu Shui, deputy director of research with China Index Academy.

Chen Sheng, president of the China Real Estate Data Academy, said the market performance is a reflection of the status quo. The sector is affected by restrictions on the property market, profitability and the development outlook of the industry.

For enterprises facing greater financial pressure, Chen suggested they take proactive steps to maintain their capital flow through smooth sales, adjust strategy to lower loans to a controllable level and maintain financial stability.

Enterprises should also pay attention to changes in market environment, finance, land, taxation and credit. They should adjust corporate strategies and increase their investment in sales and technology, which can ensure they stay sustainable and healthy, Chen added.

Industry experts suggested real estate developers upgrade project quality and services, optimize management and their business model and strengthen their corporate competitiveness for quality development, which are key growth drivers for a realty company.

"With limited growth potential for new home transactions, the Chinese property market is shifting from achieving the dominance of new home transactions to exploiting existing homes in the coming decade," Hui said.

"This would attract more and more companies to diversify their business into areas such as property management and urban renovation."