By Hu Yuanyuan (China Daily)
Updated: 2007-09-17 10:26

Smaller property developers are determined to make sure they aren't left behind. Gemdale, a Shenzhen-listed real estate company, seized a 330,000-square-meter land parcel in Tianjin on August 1 and snatched up another in Xi'an for 680 million yuan on August 3.

"Take a look at the recent statements of listed real estate companies, and you'll see that land reserves, undoubtedly, provide the most powerful chips for their placements or bond-release plans," says Jia Wolong, chief executive officer of Hong Kong Pacific International Group.

By mid-August, seven listed real estate companies had poured more than 30 billion yuan into grabbing some 10 million square meters of land in 15 cities. And the fight for new land continues.

Such frequent financing moves also show real estate companies' eagerness to shrug off high debt ratios, experts say. Statistics show that the average debt ratio among China's real estate companies has been as much as 70 percent since 2003.

However, such modes could not sustain themselves, says Feng Changchun, director of the Real Estate Research Institute of Peking University.

"Raising money from the capital market, grabbing lands at high costs, seeing shares of real estate companies soar, refinancing - such modes will lead to great risk when the market noses downwards," Feng says.

By the end of August, 64 domestically listed real estate enterprises released their half-year financial reports, with 53 making profit and 11 suffering losses. The net profit of those 64 enterprises totaled 6.987 billion yuan, a 62.6-percent increase year on year.

Among the 64 firms, 20 real estate companies accounted for 86.5 percent of the profit.

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