‘Capital Plus Expertise’ Shapes China’s Real Estate Industry

By Prne, Gaea News Network
Thursday, October 15, 2009


According to the “Sales Rankings of Chinese Real Estate Companies for Q3 2009,” report released by CRIC (China) Information Technology Co., Ltd., in cooperation with China Real Estate Appraisal, Evergrande Real Estate Group, a non-listed company, outperformed others in terms of sales of residential projects in 70 major cities across China. It took the lead in China in floor space sold in the first three quarters as well as sales volume, floor space sold, area of the projects under construction and land reserves in Q3. Sina Leju was the first source media to announce the release of this report.

Capital is the key to the development of real estate companies

With the continuous development of the real estate industry in China, competition has become increasingly fierce. Meanwhile, industrial regulations are being established, drawing much attention to the operations of developers and spurring self-regulation across the industry. All of these factors indicate a transition towards a model of capital plus expertise. Capital is crucial to the development of real estate companies. Real estate companies must maintain capital if they want to maintain a stable position in this period of reshuffling. According to the research of CRIC on Chinese real estate companies, 39 enterprises, including Evergrande, Rongqiao and Landsea, attempted to become listed via IPO or a shell company. In the future, the real estate market will remain a battlefield of land and capital.

Evergrande favored in the Capital Market

When the property market and stock market both recover, capital will flood in and real estate companies who have sought listing for the past year will be able to obtain it. Developers are selling as fast as they can to push their listing plans foward.

According to some sources, Evergrande, which put off IPO last year, has passed the hearing process for listing in the Stock Exchange of Hong Kong Limited on September 29th. As scheduled, Evergrande will hold road shows across the world in October, 2009 and list on the stock exchange in November.

From the list of the top twenty real estate companies released by CRIC, Evergrande is the only non-listed developer that is among the first five with sales revenue of RMB 24.18 billion for the first three quarters in 2009. Shengping Long, Director of China Real Estate Appraisal, remarked that supply has been recovering since the beginning of 2009, which shows a balance between supply and demand and is favorable for stable property prices. It is less likely that property prices will fall in a market with robust demand.

Evergrande rose sharply to top the rankings of floor space sold and sales volume in the first three quarters as well as that of land reserves and area of the projects under construction as of the end of Q3, 2009.

Some data show that Evergrande raised approximately USD one billion to 1.5 billion (approximately equal to HKD 7.8b billion to 11.7 billion) through listing in Hong Kong. Some insiders have pointed out that this is likely to be the first new stock to raise funds of over HKD 10 billion. After Evergrande’s listing, its market value might reach HKD 100 billion, overtaking its mainland peers.

For more information, please contact: Kevin Fax: +86-10-5895-1005 Email: Kevinmts@sina.com

Source: Sina Leju

Kevin of Sina, fax, +86-10-5895-1005, or Kevinmts at sina.com

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