China's state-owned developers dominate sales, land markets in 2023 - surveys

China Overseas Land & Investment

02/01/2024 09:01

HONG KONG, Jan 2 (Reuters) - China's property market
continued to consolidate in 2023 with state-affiliated firms
dominating the home sales and land acquisition market, private
surveys showed, as more private firms got embroiled in the
sector's deepening debt crisis.
    The top six home sellers last year were all state-owned or
state-backed developers, with Poly Developments  600048.SS ,
China Vanke  000002.SZ   2202.HK  and China Overseas Land &
Investment  0688.HK  topping the league table, according to real
estate research firm China Index Academy.
    China's largest private developer Country Garden  2007.HK ,
which defaulted on its $11 billion dollar bonds in October,
slipped to No.7 from No.1 in 2022, as its sales dropped 53% to
220 billion yuan ($30.9 billion). 
    Longfor Group  0960.HK , a major private developer that has
not defaulted on its borrowings and deemed to be financially
healthy by investors, retained its No.9 position, though sales
also decreased 15%.
    The China Index Academy said total sales of China's top 100
developers were down 17.3% to 6.3 trillion yuan ($883.70
billion) in 2023 from a year earlier, as property companies
focused on cost controls and stable development rather than
aggressive expansion.
    Since mid-2021, China's property sector has grappled with a
liquidity crisis, with many developers defaulting on, or
delaying, debt payments as they struggle to sell apartments and
raise funds. The slowdown in a sector which makes up about a
quarter of the economy has been a major blow to consumer and
investor confidence.
    The authorities have announced a flurry of measures to try
to revive the housing market but they have proven only modestly
beneficial, raising pressure on Beijing for more stimulus to
shore up demand and inject liquidity into the market.
    New home prices fell for the fifth straight month in
November, according to official data, while January-November
property investment fell 9.4% year-on-year, after a 9.3% drop in
January-October.
    In terms of land acquisition, the China Index Academy said
total value by the top 100 climbed 1.7% last year to 1.3
trillion yuan, with 89% coming from state-affiliated developers,
helped by their stronger financing and sales capabilities. 
    "Because state-owned companies have more funding advantage,
their share of the land market is expected to keep rising, and
it will create more pressure for small- to mid-sized developers
to acquire land (especially) in the core cities," China Index
Academy said in a statement.
    Rating agency Fitch said last month that property sales were
expected to decline 5% to showing no growth in 2024, compared
with its estimate of a 10% to 15% fall for 2023. The operating
environment would, however, remain challenging for developers,
it added. 

($1 = 7.1296 Chinese yuan

 (Reporting by Clare Jim; Editing by Jacqueline Wong)
 ((clare.jim@thomsonreuters.com;))