As of Tuesday, 60 real estate companies had released their interim reports, which showed that the sector's average net profit margin slid below 10 percent, the Economic Information Daily reported Wednesday.
Total revenue for the 60 companies was 301.14 billion yuan ($46.91 billion) in the first half of 2015, while total net profit reached only 25.26 billion yuan with an average net profit margin of 8.4 percent, said the report, citing data from the Hong Kong-headquartered Centaline Property Research Center.
The data revealed that among these property companies, the net profit margins of four of the developers - Greenland Group, China Vanke Co, China Merchants Property Development Co and Poly Real Estate Group Co - stood at 4.6 percent, 9.6 percent, 11.7 percent and 11.9 percent, respectively,
"The average net profit margin of real estate companies was 10 percent in 2014 and 11.97 percent in 2013, and there will be a continuing margin fall as more small and medium-sized companies release their semi-annual reports," Zhang Dawei, chief analyst at Centaline Property Research Center, was quoted as saying in the report on Wednesday.
The property sector has become one featuring low- to mid-range profits, according to the Economic Information Daily newspaper, which reported that the profit margin of 36 of the 60 companies was below 10 percent. Margins fell at 28 companies, it said.
Although the property market has achieved a rebound in first- and second-tier cities, it is under intense pressure on sales as the third- and fourth-tier cities are still in an adjustment phase, Zhang said.
Zhang said that for real estate companies, financing costs "devour" their profits and it is difficult to maintain the previous development mode of making a profit through land appreciation.
The key for the sustainable development of property companies lies in making a strategic transformation, Zhang said, noting that competition in the sector will intensify as an increasing number of non-professional real estate companies plan to leave the industry.
