“After the purchase restriction policy Shenzhen property market is relatively quiet,” LVGEM (00095) Chief Executive Officer Tang Shouchun pointed out. Out of economic consideration, LVGEM has postponed the sale of 2 projects scheduled to be sold in this quarter to the first half of next year. And he believed that since there were still rigid demand, Shenzhen property prices would continue to rise steadily.
There are still rigid demand, property prices in Shenzhen will rise steadily
LVGEM originally scheduled to launch two Shenzhen projects in the fourth quarter of this year — the value was about 4 billion. Tang Shouchun said that relevant projects had not been officially opened for sale, mainly due to the introduction of the purchase restriction policy, “we need to learn the policy, consider the market response and make adjustments”, and also out of economic consideration, the company expected to postpone the opening time to the first half of next year.
A real estate analyst said that after the purchase restriction policy, as the pre-sale permit approval was more stringent, or developers could not be satisfied with the sales price, in recent months the phenomenon of postponing the opening of sales was more common. Tang Shouchun said the delayed sale might had impact on the company’s contract sales and cash inflows, but the company is cash-rich, and performance this year will be in line with the expected. Future sale of new project will not need to have price cuts.
LVGEM has another two projects that will enter the development phase next year, of which one is expected to be launched to the market by the end of next year. Tang Shouchun believes that compared with other cities, Shenzhen property market sales scale and volume are still leading and there are still rigid demands. The “relatively quiet” condition at the moment can make the government at ease. It is expected local property prices will remain stable growth in the future.
The company earlier spent 2.1 billion on acquisition of Zhuhai project, coupled with the US project, Tang Shouchun said this year the company has spent 2.3 to 2.4 billion on acquisition. Deng Chengying, executive director of the company anticipated, next year there will be more opportunities for mergers and acquisitions in the industry. With the support of the parent company, the company will choose cost-effective projects to acquire. However, in terms of land acquisition, injection of urban renewal projects from parent company is a preferred means to ensure the level of gross margin of LVGEM.
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