Media365
China’s major property developers can expect their businesses to pick up in the remaining six months of this year as a disappointing first half fades in the rear-view mirror, according to an analysis by Morgan Stanley.
Sales and profitability are expected to decline at a slower pace, Morgan Stanley said, predicting that sales would fall 2 per cent for the rest of the year, adding up to a 10 per cent decrease for the whole year. Sales could even pick up in the fourth quarter, “backed by a rich saleable [stock of completed homes] in the higher tier cities”, the bank said, as the US Federal Reserve’s rate cut cycle begins.
The positive outlook is a stark contrast to the weak interim results reported by China’s largest developers as they struggled to claw their way out of a slump that is running into its fifth year. Revenue of major developers fell by 4 per cent, while development margins – a key indicator of project profitability – continued to be compressed and core profits fell by 17 per cent.
The developers “provided positive guidance for the second half and beyond, particularly in development margin recovery and rental income growth,” the report said.
