A list of the top 100 Chinese real estate developers was recently released in Beijing by the China Real Estate TOP 10 Research Team.
Originally composed of the Enterprise Research Institute of Development Research Center of the State Council of China, the Institute of Real Estate Studies of Tsinghua University and the China Index Academy, the research team was joined in November 2006 by China Real Estate Association, further enhancing its authority as a market indicator and stimulated the conversion of research results into guidelines for industry productivity.
The annual study has been conducted since 2004 and its findings have been widely accepted by governments and financial institutions as an important standard for judging developers' comprehensive strength in the real estate industry.
One of the purposes behind researching the top 100 Chinese real estate developers is to identify a group of excellent real estate developers, which leads the market with superior overall strength, efficient management system, and makes greater contributions to society.
Moreover, through comprehensive and intensive analysis of developers' profiles, taking into account such features as size, profitability, debt payment ability, growth potential and taxation, the research aims at encouraging Chinese real estate developers to concentrate more on brand building and sustainable growth.
Common features
The steady increase of net assets indicates continuous growth of the top 100 real estate developers.
The assets of the top 100 real estate developers (the TOP 100s) increased dramatically in 2006. Average total assets reached 7.31 billion yuan, and average net assets were 2.5 billion yuan.
The average growth rate of total and net assets of the TOP 100s was 38.8 and 59.4 percent respectively, representing 16.1 and 5 percent increase year-on-year respectively.
Average growth rate of real estate investment of the TOP 100s has been on the rise and their reserved land space has shown consistent increase.
Total investment value and growth rate of the TOP 100s in 2006 averaged 2.43 billion yuan and 43.4 percent respectively, representing 4.6 per cent increase year-on-year.
As macroeconomic control is in favor of real estate developers' cross-regional expansion, the TOP 100s were able to continually enhance their real estate investments.
Average planned floor space and average reserved land space last year were 3.97 million square meters and 3.81 million square meters respectively, a growth of 36.0 and 30.8 percent in that order.
Though purchased land space continually decreased nationwide, the reserved land space of the TOP 100s maintained its steady growth, further consolidating their share of land resources.
Increase in sales volume and further expansion of market share
The average sales volume and the average total revenue set new records of 2.71 and 2.26 billion yuan respectively in 2006, showing respective increase of 34.8 and 28.5 percent. These indicators of the TOP 100s are higher than the industry average.
Top 10 developers
Comprehensive strength
China Real Estate Top 10 Research Team considers the comprehensive strength of developers a reflection of their combined advantages in size, growth rate and profitability. Accordingly, top 10 developers in terms of comprehensive strength (CS Top 10s) were also listed.
The CS Top 10s all possess common features like large size, steady growth and profitability.
In terms of size, the average total assets of the CS Top 10s reached 29.94 billion yuan, with 88 billion yuan of real estate investment, a total planned construction area of 54.64 million square meters and total completed area of 14.86 million square meters.
China Vanke Co Ltd topped the CS top 10s both in total investment amount and completed area.
The average annual sales growth rate of the CS Top 10s went up 38.25 percent in the last three years and the average annual core business revenue growth rate reached 45.33 percent, while the average annual net profit growth rate was 87.88 percent. Reserved land area was 167.66 million square meters, a 51-percent increase compared to that of the 2006 CS Top 10s, which built a solid foundation for sustainable growth of the developers.
In terms of profitability, the average net profit of the CS Top 10s stood at 1.28 billion yuan.
China Overseas Land and Investment Ltd, with a net profit of $295.62 million, took first place again.
Average annual returns on assets (ROA) of the CS Top 10s was 5.57 percent in the last three years, while average annual returns on equity (ROE) was 18.28 percent.
The average annual debt asset ratio of the CS Top 10s was 66.86 percent for the last three years.
Size
The total assets of top 10 developers in terms of size (S Top 10s) were 239.89 billion yuan, accounting for 32.8 percent of the Top 100s, while their net assets were worth 82.8 billion yuan.
With investments totaling 60.36 billion yuan, the S Top 10s have completed a total construction area of 10.03 million square meters out of planned areas of 29.56 million square meters, to earn 62.96 billion yuan in business revenues.
Backed by assets worth over 40 billion yuan, Beijing Capital Development Holding (Group) Co Ltd, China Vanke Co Ltd, and Hopson Development Holdings Limited are regarded as capital magnates in the real estate industry.
Profitability
The total net profit of top 10 developers in terms of profitability (P Top 10s) was 9.5 billion yuan. China Vanke Co Ltd and China Overseas Land and Investment Ltd have enjoyed net profit worth over 2 billion yuan each.
The ROA of China Overseas Land and Investment Ltd, Hopson Development Holdings Limited, China Vanke Co Ltd, and other developers ranged from 6 to 10 percent while the ROE of the P Top 10s went up by 1.59 percent in 2006, representing a steady upward trend.
Growth
The top 10 developers in terms of growth (G Top 10s) have won substantial advantages in terms of reserved land area, sales growth, business revenue and net profit.
The average annual growth rate of their core business revenue was up 75.53 percent from 2004 to 2006.
The last three years saw an average annual net profit growth of 93.11 percent and average annual sales growth rate of 52.67 percent.
Meanwhile, the total land reserved area of the G Top 10 reached 111.24 million square meters, which guarantees their future development.
Social responsibility
The honor of 2006-2007 High Social Responsibility Developers (2006-2007 HSRD) was bestowed upon 15 developers according to their contribution to tax revenues and charitable donations.
Tax paid by the 2006-2007 HSRD accounted for 42 percent of the total tax payment of the TOP 100s.
China Vanke Co Ltd, China Overseas Land and Investment Ltd, Hopson Development Holdings Limited, and Dahua (Group) Co Ltd, with contributions to tax revenue surpassing 1 billion yuan each, were at the top of the list.
Star developers
A number of 2007 TOP 100 Real Estate Developers were singled out in terms of characteristic projects, brand consciousness, development strategies and regional expansion.
Forty-three developers out of the TOP 100s list have been named 2007 Star Developers by the China Real Estate TOP 10 Research Team.
Three main forces
Many of the 2007 Star Developers are non-governmental firms, such as Fujian Zhenro Group Co Ltd and Shanghai Zenisun Investment Group Co Ltd.
The State-owned 2007 Star Developers, such as Beijing Urban Construction Investment and Development Co Ltd and Beijing Gem Real Estate Development Co Ltd, are well known on the Chinese property market.
The market share of foreign-funded 2007 Star Developers was also considerable. Among them are Fujian Rong Qiao Group Co Ltd, Excellence Group Co Ltd and SPG Land (Holdings) Limited.
Core competitiveness
Some of the 2007 Star Developers showed exemplary competitiveness in the real estate business involving development integration, design, construction, marketing and property management. Among them were Construction Housing Group Co Ltd, Zhejiang Zhong'an Real Estate Development Co Ltd and Rise Sun Real Estate Development Co Ltd.
Some of the Star Developers are diversifying into other fields while focusing their main business on real estate development. Such developers include Beijing North Star Company Limited, Heung Kong Southern Group Co Ltd, Paragon Group (Guangzhou) Limited and Zhejiang Hongrun Holding Co Ltd.
Diverse projects
Project developments by the 2007 Star Developers are diversified in their goals.
Residential projects, such as Changheyu Villa by Beijing North Star Company Limited, Senlin Villa by Shanghai CRED Real Estate Stock Co Ltd and Yanhaisailuocheng by Coastal Greenland Group focus on environmental protection.
Some projects are infused with culture insights, such as Zhongkedaxuecun by Shanghai Zenisun Investment Group Co Ltd, Bishanlinhai by Xiamen Yuzhou Group Co Ltd and Zhong'an-Shanshuiyuan by Zhejiang Zhong'an Real Estate Development Co Ltd.
Residential developments combining both these features include Shihuashui'an by Beijing Urban Construction Investment and Development Co Ltd, Yulongshanzhuang by Wuhan Universe Industry Group and Rongqiaobandao by Fujian Rong Qiao Group Co Ltd.
Cross-regional expansion
The 2007 Star Developers are widely recognized on the regional market, and include Fujian Zhenro Group Co Ltd, Jilin Yatai Real Estate Ltd Co, and Guangxi East Hangyang Investment Group Co Ltd.
The plentiful reserved land space ensured sustainable development for the star developers.
For instance, the reserved land space of Guangxi East Hangyang Investment Group Co Ltd and Fujian Zhenro Group Co Ltd was more than 3 million square meters.
In addition, some Star Developers like Powerlong Group Development Co Ltd and Xinyuan (China) Real Estate Ltd, are focusing on cross-regional expansion, while some Star Developers based in the city headquarters have achieved large-scale growth as well, such as Beijing Gem Real Estate Development Co Ltd and Ningbo Youngor Real Estate Development Co Ltd
People-oriented corporate culture a priority for 2007 Star Developers
The recruitment, reservation and training of human resources and corporate culture building were at the top of the next to-do list of the 2007 Star Developers.
The real estate industry will remain a key growth engine for the Chinese economy as it boosts both consumption and investment. The challenge ahead for Chinese real estate developers is a polarized market with frequent merging and reorganizing. It leaves real estate developers with no choice but to get bigger and stronger in the next few years.
