'Mission possible' for Chinese developers

Updated: 2013-05-13 15:15

By Hu Yuanyuan (chinadaily.com.cn)

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Chinese developers are on track to meet sales targets for 2013 after a strong first quarter, an industry report by Standard & Poor's Ratings Services revealed.

But sales growth may slow down over the course of the year as the government's latest market-cooling measures kick in, according to the report.

"The developers' sales targets may appear aggressive, but the strong sales so far in what is usually a slow-selling season, suggests it could be mission possible,'' said Standard & Poor's credit analyst Fu Bei.

"While we expect some of the sales momentum to lose steam, overall performances should be good for full-year 2013.''

The report notes, however, that the governments of top-tier cities are likely to more strictly implement new regulations, and that could have a dampening effect on transaction volume.

"In our base case, we continue to assume up to 10 percent growth this year in transaction volume for bigger players and limited growth for smaller players. We expect 5 percent growth in average selling prices on average," said Fu.

"Given the mix of opportunity and challenges, we maintain our stable outlook on the sector. Ratings are likely to remain largely stable."

The report also addresses the improving funding channels for developers, their stronger discipline toward growth, and the likelihood of further industry consolidation.