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60 percent of real estate companies hurting: report

(Global Times)

08:16, July 18, 2012

Twenty-eight of 49 listed Chinese real estate companies suffered losses or reduced profits in the first half of this year, according to a report released Tuesday by Homelink, a Beijing-based real estate brokerage.

"The government's controlling policy of February 2011 has hit the real-estate industry since 2011," the report stated.

Shanghai-based Poly Real Estate Group, one of China's top three real-estate companies in terms of revenue, suffered a 12.13 percent year-on-year loss in the first six months of this year, according to the report.

"The 49 listed real-estate companies are mostly small- and medium- sized companies," said Zhang Xu, an analyst at Homelink. "As they account for 60 percent of the real-estate industry, they can show the overall profit situation of the industry."

China this year has eased credit controls and cut interest rates to help real-estate companies who are struggling under tightened regulations, Zhang told the Global Times, meaning the dampening effect on companies will not be that significant.

"I think the real-estate industry has little chance of reversing the profit situation in the second half year, as housing prices will not increase that much," he said.

Home prices in the country's 70 major cities declined at a slower pace in May for the second consecutive month, according to the National Bureau of Statistics (NBS) monthly survey released in June.

A total of 43 out of the 70 large- and medium-sized cities witnessed a drop in newly built home prices in May month-on-month. And the number of cities reporting price drops remained unchanged from April, and a little lower than 46 in March, according to the NBS.

China's sluggish market with slowing growth can also explain the losses, Song Ding, a senior tourism and real-estate researcher with Shenzhen-based China Development Institute, told the Global Times.

"Due to the lack of structural diversity in the real-estate industry, especially those small- and medium-sized companies, the real-estate industry can easily be affected by the government policy and market situation," Song said.


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