China Resources Land said on Monday an increase in sales in more developed cities, where it mainly owns luxury properties, boosted its first-half margins, as other developers face a squeeze due to high land costs and slower sales.
China's eighth-largest developer by sales said 40 percent of the 37 billion yuan ($5.78 billion) in contracted sales it made in the first six months were in bigger cities such as Shenzhen, Shanghai and Beijing, where selling prices, especially for high-end properties, are higher.
Contracted sales of the company jumped 45 percent from the same year-ago period while the gross profit margin rose 1.8 percentage points.
"Our gross margin rose because of the improvement on the geographical structure [of our developments]," Vice Chairman Tang Yong told reporters after the company reported its first-half core profit rose 32 percent to HK$5.02 billion ($648 million)
The company's CFO James Yu Jian said margins of projects in bigger cities were around 49 percent and forecast the company's overall margin to remain stable at 32.2 percent in the next two years.
The Shenzhen-based company said it will open four shopping malls in the second half to expand its commercial properties portfolio, following a national consumption recovery since the second quarter.
"Sector policies and monetary policies are likely to remain loose," the company said in a statement. "First-time homebuyers and first-time upgraders remain as the mainstream and show healthy demand for property."
China's largest property developer by sales, China Vanke Co, reported a 5.5 percent rise in first-half net profit on August 16, but said operating margins shrank due to higher purchasing costs.
Property sales in China have bottomed out in the first half after a year-long slump, propped up by a barrage of government support measures since last September, with home prices, especially in first-tier cities, rising for a third consecutive month in July.
