China’s embattled property market is showing signs of a tentative recovery, as some developers posted stronger earnings and reduced losses, supported by government stimulus measures and recovering consumption.
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China Resources Land’s first-half net profit increased by 16.2 per cent from last year to 11.9 billion yuan (US$1.66 billion), according to the state-owned developer’s statement on Wednesday. Sales rose 20 per cent to 94.9 billion yuan.
Sunac, one of China’s largest privately owned developers, founded by the magnate Sun Hongbin, said on the same day that its interim loss narrowed by 14.4 per cent to 12.8 billion yuan, helped mainly by lower operating and financing costs.
The improved results underscore how a recovery in mainland China’s retail consumption and the government’s policy lifelines towards the builders and developers have begun to sow the seeds of recovery in the property industry. As recently as a year ago, many developers including Sunac were still in crisis mode as they struggled with ballooning debt, tepid sales and a dearth of financing from banks.
CR Land’s earnings growth was driven by a 25.8 per cent rise in property development revenue to 74.4 billion yuan, which accounted for more than three-quarters of the total. Revenue from investment properties – earned through rental income and property value appreciation, including shopping malls and offices – rose 5.5 per cent to 12.1 billion yuan.
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Consumption recovery and strong retail sales lifted profitability in the shopping centres segment owned by China Resources. The Shenzhen-based developer said retail sales from its malls surged 20.2 per cent to 110.2 billion yuan, “significantly outpacing” the national total retail sales. Operating profit margin for the segment also reached a record 65.9 per cent.