Country Garden sees home sales jump as Beijing’s rescue package gives developers a boost
- ‘We are encouraged by signs of a pickup in weekly sales post policy easing,’ says HSBC Global in a report
The Foshan-based company that was once China’s top home builder by sales shifted 4.29 billion yuan (US$592 million) worth of properties last month, equivalent to 440,000 square metres (4.7 million square feet) of gross floor area, according to a filing with the Hong Kong stock exchange on Wednesday.
That was 11.4 per cent higher than its April sales of 3.85 billion yuan for contracted gross floor area of about 430,000 square metres.
“Improvement in sales sentiment has been observed in top-tier cities,” said Martin Wong, a senior director at Knight Frank. “The recovery is concentrated in tier 1 and some tier 2 cities, but it will take time to see if the recovery can be sustained as the economy and buyers’ confidence remain weak.”
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Country Garden is due for another court hearing in Hong Kong on June 11 as it faces an action by creditors seeking some of its US$189 billion of liabilities.
The developer had 1.36 trillion yuan in total liabilities as of June 30 last year, according to its latest published accounts. They included 258 billion yuan of bonds and bank borrowings.
The developer did not file its 2023 report by April 30 as required by Hong Kong’s stock exchange listing rules.
Major Chinese cities including Shanghai, Shenzhen and Guangzhou have lowered mortgage rates and relaxed home purchase restrictions to lure buyers. China’s technology hub, Shenzhen, where China Vanke is based, reduced down payment requirements by 10 percentage points to a minimum of 20 per cent for first-time buyers and 30 per cent for second-home purchasers.
“Since May 17, the government has accelerated the roll-out of relaxation measures, and May primary sales registered modest improvements with the top 100 developers up 4 per cent month-on-month,” HSBC Global Research said in a note on Wednesday.
“While it takes time for the revived market sentiment to translate into actual sales, we are encouraged by signs of a pickup in weekly sales post policy easing.”
June sales will “exhibit a clearer recovery trend with relaxations gradually taking effect and launches picking up pace in the run-up to the midyear,” it added.
Nationwide sales of the top 100 Chinese developers rose 3.4 per cent to 322.4 billion yuan in May, according to the China Real Estate Information Corporation. Aggregate sales were still down a third from a year ago.
