Debt-laden property developer China Vanke’s contracted sales rose in May as the country’s biggest home builder resumed investments in new projects after getting bank funding and following Beijing’s stimulus policies to rescue the crisis-hit sector.
The company said home sales rose 11.3 per cent from the previous month to 23.3 billion yuan, according to a statement to Shenzhen Stock Exchange late on Monday. That sent its shares soaring 7.7 per cent on the Hong Kong stock exchange on Tuesday. For the first five months this year, it had transacted sales of 102.2 billion yuan (US$14.1 billion), down 39 per cent from a year ago.
The monthly sales growth emerged as China’s authority unveiled a historic rescue package for the sector last month, including a 300 billion yuan relending facility and cuts in mortgage rates.
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.
Meanwhile, China Vanke added two land parcels with a stake of 51 per cent in each, marking the first such investment since January, the statement said. The plots, located in Shenyang city in China’s northeastern Liaoning province, will require a total payment of 248 million yuan attributable to the company’s equity holdings.
It came days after Vanke sold a land plot in Shenzhen for 2.24 billion yuan, in a bid to finance a debt repayment. The Shenzhen-based developer also obtained 20 billion yuan in syndicated loans last month from the country’s biggest lenders including China Merchants Bank, and received a 7.8 million yuan bank loans guaranteed by its subsidiaries.
Nationwide, transacted sales by top 100 Chinese developers in May rose 3.4 per cent from April to 322.4 billion yuan, according to China Real Estate Information Corporation. China Vanke ranked third on the list in May, following state-backed Poly Developments and Holdings and China Overseas Land and Investment. Still, aggregate sales fell 33.6 per cent from a year ago.
