The real estate market suffered a slowdown in 2011, likely to see a repeat this year
More than half of China's top 20 property developers failed to meet their sales targets in 2011, because of the waning transaction volume in the residential sector and as the nation's toughest-ever tightening policies remain in force.
Analysts predict that the low transaction levels are unlikely to change this year and that property developers will feel a sharper chill.
In a list of China's top 20 property developers by sales, released by China Real Estate Information Corp (CRIC), only eight realized their sales targets, while 10 failed to reach their targets, the Southern Metropolitan Daily reported on Friday. Two companies did not make their 2012 sales targets public.
Major domestic developers, including the nation's largest developer by market value China Vanke Co Ltd, Shanghai-based Greenland Group, Hong Kong-listed Longfor Properties Co Ltd, all missed their sales goals in 2011, said the CRIC report.
Vanke topped the list with sales of 121 billion yuan ($19 billion) in 2011, but Xinmin Evening News reported that the company had set a sales target of 140 billion yuan for the year.
Ranked third in the list, Greenland sold 8.08 million square meters (sq m) of gross floor area for 77.6 billion yuan, which is still a shortfall from its sales goal of 10 million sq m and 110 billion yuan.
"The lower-than-expected sales volume is in line with market expectations as the central government's grip on the housing sector is unlikely to be relaxed," said Lu Qilin, research director at Shanghai Deovolente Realty Co.
In 2011, Beijing saw a slump in traded space of 21.74 percent year-on-year. In Shanghai the figure was 17.24 percent, while in Chongqing it was 30.99 percent, according to a report released by the researcher, China Real Estate Index System.
"China's property market, especially the developers, will experience a difficult time in 2012, as the current tightening policies will not be eased in the next six months," said Eva Lee, a property analyst at UBS AG.
Some State-owned developers predicted the tightening measures will even stretch into 2013.
Lee said that leading property developers will obtain a larger market share as smaller operators will be gradually phased out during the industry downturn.
Listed developers accounted for up to 15 percent of the property market in the first nine months of 2011. Lee said their market share is likely to surge to 20 percent by the end of 2012.
To survive the current tightening chill, many developers will resort to steeper discounts to replenish their cash flow. "This is a matter of survival," said Lu.
Lee predicted there will be about 25 percent of new supply surplus to demand in 2012.
"Many property developers will slow their pace of development because of the rising volume of available residential space," he said.
Meanwhile, in order to replenish their cash flow, many companies have started to suspend or delay their land-purchase procedures.
Source:china.org