MEDIA RELEASE PR36648
New Model for Chinese Real Estate Developers: Fast-turn Around
BEIJING, Oct. 19 /PRNewswire-Asia-AsiaNet/ --
Evergrande Real Estate, seeking accelerated growth, sold 4.537 million sqm of floor space during the first
three quarters of this year, with sales revenue of RMB23 billion, a year-over-year increase surpassing 150
percent. During the third quarter, the developer sold 2.303 million sqm of floor space, with sales revenue
reaching RMB12.33 billion. As such, the real estate player is expected to easily achieve its sales targets of 5
million sqm and RMB30 billion for 2009. Going forward, the developer plans to adopt a "scale plus brand"
strategy, maintaining land reserves of around 50 million sqm at any time, accelerating construction of new
houses and expanding sales, while improving quality of its products, with the goal of achieving an annual sales
target of RMB50 billion by 2011. Sina Leju was the first media source to announce the release of this report,
part of which is as follows.
Fast-rising companies have always sought fast expansion based on a rapid turn around in the sale cycle,
allowing them to gain market share and build up positions in the industry. Evergrande adopted this strategy in
a move to drive significant increases in results.
In the real estate sector, implementation of such a strategy calls for a sustained healthy supply of land
reserves and construction starts. Since 2006, Evergrande has maintained its leading position in land reserves
and the area of new houses under construction across China. The report released by CRIC (China) shows
that as of the end of the third quarter, Evergrande owned land reserves reaching 51 million sqm, becoming the
largest landholder in the Chinese property market. Adequate land reserves can help companies avoid risks
resulting from price fluctuations. Price increases in buildings always lead to price increases in land, so healthy
land reserves can provide a guarantee that a company can maintain steady growth. However, Evergrande
doesn't maliciously hoard the land it buys. According to a CRIC (China) report, Evergrande now has
approximately 17 million sqm of floor space under construction, becoming the developer owning the largest
area under construction in China.
The CRIC (China) report shows that companies seeking fast turn around of assets don't look for huge
margins on their sales, but rather seek a high volume of sales, garnering larger market share and speeding up
the turn around through lower prices. Data shows that the average price for homes put on the market by
Evergrande was RMB5,329.5 per sqm for the first three quarters.
"Projects initiated by Evergrande are commonly cheaper than their surrounding ones," said one market
participant. Obviously, the developer's marketing strategy is in line with its concept of "properties for the
common people".
At the beginning of 2006, Evergrande had on hand land reserves of only 3.1 million sqm, increasing to 51
million sqm by the end of Q3 2009. At the same time, the property developer expanded its presence from
Guangzhou and Foshan to 23 cities. Evergrande's rapidly expanded sales results and land reserves are
mainly located in the country's second-tier cities.
A study pointed out that the large number of land reserves, an operating model based on fast turn around
and the impending IPO are driving companies, such as Evergrande, to achieve a quantum leap in their
development. Evergrande is planning to achieve its annual sales target of RMB50 billion by 2011. At that
point, the real estate sector's competitive pattern may change in China.
For more information, please contact:
Kevin
Fax: +86-10-5895-1005
Email: Kevinmts@sina.com
SOURCE: Sina Leju
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