Bloomberg News

Guangzhou R&F Is ‘Confident’ of Meeting Sales Target Amid Curbs

November 29, 2011

Nov. 29 (Bloomberg) -- Guangzhou R&F Properties Co., one of the biggest landlords in the Southern Chinese city’s business district, is “confident” of meeting its residential sales target this year, even as the government expands housing curbs.

“We’re pretty confident we’re going to hit our revised target” of 32 billion yuan ($5 billion), Adrian Chan, assistant to chairman and a spokesman for the company, said in a Nov. 25 interview. “We’ve seen a lot of people who want to upgrade their homes. They are now more actively looking, which is a good sign for transactions.”

Guangzhou R&F and rivals including Evergrande Real Estate Group Ltd. and Agile Property Holdings Ltd. have halted land purchases to combat slowing sales after the government expanded property curbs this year, including raising down-payment and mortgage requirements, and imposing purchase restrictions in about 40 cities to avert an asset bubble. China’s home prices in October had the worst performance this year, falling in 33 out of 70 cities monitored by the government from September.

Analysts including BOCOM International’s Toni Ho and Macquarie Securities Ltd.’s David Ng have said the developer, which has about 30 percent of its gross asset in Guangzhou, may not be able to achieve its target this year, even after it cut the forecast to 32 billion yuan from 40 billion yuan.

The developer posted contract sales of 23.5 billion yuan for the first 10 months of the year, or 73 percent of its target, it said earlier this month.

The company has about 26 million square meters (280 million square foot) of land reserve in the country, which is “enough to support its development in the next four to five years,” Chan said. “We have already prepared for the case of further degradation in the market conditions.”

Guangzhou R&F’s shares has fallen 46 percent in Hong Kong this year, one of the worst performing Chinese developers in the city. The MSCI China Index, which includes the stock, fell 22 percent during the same period.

China’s October housing transactions fell for the first time in three months, declining 25 percent from September, according to government data.

--Editors: Linus Chua, Tomoko Yamazaki

To contact the reporters on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net


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