Realty firms see surge in Q3 inventories

A construction site in Beijing. At least 22 land purchase deals were made nationwide in October for a combined space of 23.5 million square meters at an average price of 9,787.5 yuan ($1,600) per square meter, the highest since January this year. [Wang Jing / China Daily]

Statistics reflect current financial landscape of sector, industry experts say

Real estate companies listed on the mainland bourses saw a surge in inventories during the third quarter of the year, a report said on Monday.

The 142 A-share listed realty companies reported combined inventories of some 2.3 trillion yuan ($375.8 billion) in their third-quarter financial reports, a 21 percent year-on-year increase, according to statistics provided by Shanghai-based WIND Co Ltd, a financial information services provider.

Shenzhen-listed China Vanke Co Ltd reported inventories of 321 billion yuan, most among all the A-share listed developers.

Shanghai-listed Poly Real Estate Group Co Ltd (275 billion yuan) came after Vanke, followed by Shanghai-listed Gemdale (Group) Co Ltd (94 billion yuan) and Shenzhen-listed China Merchant Property Development Co Ltd (86 billion yuan).

The four developers are also among the largest developers in China and their data are often considered the barometer of China's realty climate.

The big players' sales data reflect the current financial landscape of the real estate industry, said analysts.

Xue Jianxiong, research director of China Real Estate Information Corp, said: "On the one hand developers are acquiring land parcels aggressively, and on the other hand, tight policies and credit conditions are crimping home sales."

At least 22 land purchase deals were made nationwide in October for a combined space of 23.5 million square meters at an average price of 9,787.5 yuan per square meter, the highest since January this year.

Among the deals, seven were for housing projects, which had combined space of 1.14 million sq m with average price of 15,172 yuan with premium rate reaching 36 percent.

Sam Xie, director of CBRE Research, said: "The very fact that the land market is warming up shows that developers' sentiment is rising. The record also reflects that developers have been diversifying their projects, with some shifting from housing projects to urban complexes and shopping centers."

The sales performance in October, after home purchase limits were lifted in several cities, shows that more relaxed policies would help trigger a further surge in demand during the next quarter.

"Developers will further cut prices and give better offers to attract buyers to meet the revenue goals for 2014", said Wu Huimin, director of residential property at real estate company DTZ East China.

During the first three quarters of this year, about 60 percent of China's top 50 realty developers by sales revenue reported declining average prices of sold properties.

As many as 26 developers said the average price of sold properties dropped less than 10 percent year-on-year, and six developers said their property price dropped more than 10 percent, according to CRIC.