Guangzhou R&F Properties, the Chinese developer behind the £470m joint purchase of Nine Elms Square, SW8, has been buoyed by increasing sales in its home country despite its government’s attempts to cool the domestic residential market.
In a statement accompanying its H1 results, R&F Properties said: “In the first half of 2017, the China property market went from strength to strength, even as policymakers introduced austerity to curb market speculation and property price increases.
“The strength of contracted sales was driven largely by a pick-up in volume in third- and fourth-tier cities, where end-user demand and urbanisation provided the growth engines.
“In contrast with previous periods, contracted sales and property markets in first- and second-tier cities saw relatively slower growth as a result of stricter policies introduced specifically to cool the property market and curb sales momentum.”
The company reported 31% year-on-year sales growth in H1 while contracted sales grew to RMB44.8bn (£5.3bn) between January and July 2017. As of July, the group had around RMB68bn of contracted sales for delivery in 2017 and 2018.
Authorities in more than 60 Chinese cities have imposed restrictions on buyers, selling prices and mortgage loans since late 2016 to fend off a housing bubble. Larger cities such as Shanghai and Beijing have witnessed the tightest controls, with more relaxed policies in place in smaller cities to support first-time buyers and rural-to-urban migration.
The company’s gross margin rose to 36.2% in 1H 2017 from 25.4% in 1H 2016 as a result of higher selling prices and margins related to its mature projects in major cities.
The joint takeover with Hong Kong-listed CC Land of Dalian Wanda’s interest in Nine Elms Square (pictured) from St Modwen represents R&F’s third UK purchase. Its other assets are Vauxhall Square, a residential scheme neighbouring the Nine Elms Square site, and Nestlé Tower in Croydon, south London.
At the end of June 2017, the company’s land bank totalled 522m sq ft across 51 locations: 46 in cities and areas in China, two in Australia, and one each in the UK, Korea and Malaysia.
Established in 1994 and listed on the Hong Kong Stock Exchange in 2005, R&F Properties is considered a mid-sized developer in China’s residential and commercial property sector. Despite being listed, the company’s co-founders, Li Sze Lim and Zhang Li, together own a controlling equity interest of 33.5% and 32% respectively.
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