About one third of China’s listed real estate developers expect a loss for 2015 while nearly 50 percent said they would suffer a drop in net profit despite a general recovery in the property market, latest data showed.
Fifteen of the 50 property developers listed on the Shanghai and Shenzhen stock exchanges which have released their annual performance forecast said they would suffer losses while 23 expect a year-on-year drop in net income, financial information provider Tonghuashun said in a report.
Shanghai-based China Enterprise said it expects an annual loss of between 2.4 billion yuan (US$365 million) and 2.5 billion yuan, one of the largest among its peers, due to continuing flat sales in second and third-tier cities where the company is largely present. The firm has also been forced to cut prices of some of its housing projects.
“To some extent, this reflects an industry-wide scenario that Chinese developers in general are facing a drop in profit margins amid ever-rising land costs and more expensive sales and marketing costs,” said Yan Yuejing, an analyst at E-House China R&D Institute.
But Yan said it is unnecessary to worry too much as the country’s housing market is recovering steadily with better-than-expected sales over the past 12 months amid demand from buyers and rising home prices.
The value of new home sales in China rose 16.6 percent in 2015 from a year earlier while volume added 6.9 percent as sentiment rebounded strongly in first-tier cities, the National Bureau of Statistics said last week.
Home prices rose in 39 of the 70 cities tracked by the bureau in December from a month earlier, official data showed.