Vanke expects dreary month
'Sharp' decline in sales predicted after 221% revenue boost in January
SHANGHAI - China Vanke Co, the country's biggest developer, said it expects a "sharp" drop in sales this month after revenue in January more than tripled to a record 20.1 billion yuan ($3 billion).
Revenue rose 221 percent last month from a year earlier, making Vanke the nation's number one residential property developer, with monthly sales in excess of 20 billion yuan, the Shenzhen-based company said late on Wednesday. It sold 1.65 million square meters (sq m) of property in January.
Vanke's sales came before the government extended property curbs to ensure housing remains affordable amid soaring home prices. Last month, China raised the minimum downpayment for second-home purchases, told local governments to set price targets on new properties and introduced taxes for residential properties in Shanghai and Chongqing. The central bank raised interest rates this week for the third time since mid-October.
"Vanke has a good sales ability, while many buyers dashed into the market ahead of the property measures," Du Jinsong, a Hong Kong-based property analyst at Credit Suisse Group AG, said on Thursday. "Sales will fall this month because homebuyers held a wait-and-see position after the government policies."
On Thursday, Vanke's shares rose 2 percent to 8.18 yuan as of 3 pm on the Shenzhen Stock Exchange, trimming the loss in the past year to 12 percent. The measure tracking property stocks on the Shanghai Composite Index, which doesn't include Vanke, also gained on Thursday.
Many of Vanke's December sales were booked in January, boosting the sales figure, while February, which had the lunar new year holiday, is usually a low season for property sales, said Tan Huajie, the company's board secretary, in the statement. "We proactively did promotions during the lunar new year holiday, but February's sales are still likely to drop sharply from January," Tan said.
About 88 percent of Vanke's apartments sold in January were less than 144 sq m, according to the statement. Vanke added 12 new projects in nine cities last month and entered the smaller city of Wuhu, in Anhui province, and Qinhuangdao, in Hebei province.
Vanke's strategy of moving into smaller Chinese cities may drive their growth further this year, said Credit Suisse's Du.
The company will pay close attention to the market's reaction to the government curbs, Tan said in the statement.
China's property price rose 6.4 percent in December from a year earlier, increasing for a 19th month, the country's statistics bureau said on Jan 17.
Bloomberg News
(China Daily 02/11/2011 page17)
