Beijing - Arabstoday
More than 60% of property companies see lower profits or losses. Listed property developers' first-quarter reports have been coming in, and they're full of gloom: More than 60% of those whose shares trade on the A-share market reported lower profits or losses. According to an index tracking 149 A-share developers, compiled by Shenyin & Wanguo Securities Co, their sales edged up just 0.18% to an aggregate 71.7 billion yuan ($11.4 billion), while their earnings fell 3.13% to 9.4 billion yuan. Among the total, 41 property companies reported first-quarter losses. Huge inventories have deepened developers' woes, said Xue Jianxiong, an analyst from China Real Estate Information Corp. By March 31, inventories stood at 1.37 trillion yuan, up 34.3% year-on-year. The Rating agency Standard and Poor's Financial services LLC said in a report at the end of April that the refinancing clock is ticking for the nation's 80,000-plus property developers amid weak sales, even including the industry's biggest players. The 30 publicly rated developers have more than 100 billion yuan in total debt maturing this year, the report said. The report said that default risks have increased this year, with several developers in a "weak" liquidity position. Many developers are cutting prices on new projects to spur sales and raise cash, especially in big cities such as Beijing and Shanghai. In Shanghai, for example, some developers have offered discounts of up to 40%, even for prestigious waterfront and central business district locations, according Anjuke.com, an online house-trading site. Housing prices in suburban Shanghai have been dropping since late 2011, and discounts are widespread in the most expensive downtown areas. Price cuts in Shanghai are inevitable because developers need cash, Xue said. "This is the hardest time for the industry since I entered this sector five years ago, because we hardly saw any sales in the past three months," said Lin Jiantao, a property agent in Changning district, Shanghai. Lin said prospective buyers show little interest in finalizing deals now, and many plan to wait for further price declines. A survey by the People's Bank of China, the central bank, in late March, bore out Lin's comment. Among some 20,000 respondents in 50 cities across the nation, only 14.1% said they intended to buy properties in the coming three months, the lowest figure since 1999. Less than 10% of the polled residents in Beijing and Shanghai said they would invest in real estate in the next quarter.