Pan Jun, chairman and chief executive officer of Fantasia Holdings Group, sees a more disciplined and mature mainland property industry. Provided To China Daily

The Chinese real-estate developers have become more disciplined and more matured now than they were two years ago, thanks to the central government's tightened policies targeting the real-estate market, Pan Jun, chairman and chief executive officer of Fantasia Holdings Group told China Daily.

"Of course the (real-estate) industry is in pain (under the measures)," said Pan, "but the macro policies are like physical training to developers, which made us healthier and more mature."

Reflecting to way back in 2009, when Fantasia, the Shenzhen-based developer, listed on the Hong Kong Exchange, Pan said at that time, all investors cared about was its land bank.

"(It was) not just Fantasia alone, (but rather) the land bank (issue) was the single most important thing for every developer," said Pan, explaining that back then, the land price was rising rapidly, and developers did not have to lift a finger as the land ownership itself was a guarantee of profit.

So, at that time, developers in China were doing whatever they could to expand their land bank, he said.

"Now, no one cares that much about the land bank, since land hoarding is no longer allowed by the central government," he said, adding that currently, investors are most concerned about the developers' cash position.

"Cash is the only thing that could help developers to get through the difficult times."

Pan said when the company posted its 2011 annual results in March, it was then facing serious financial pressures. Records show that as at December 31, 2011, the company's bank balances and cash was around 13.36 billion yuan, a 45.6 percent decrease from a year ago.

Pan explained that he was then concerned about the company's land payment and the funds it needed to acquire new land sites.

"Now most of the pressure has been eased," said Pan, "one of the reasons is that the cost of fund raising has been decreased and more financing channels have opened in China."

He said that as China has entered into the rate cut cycle, the "darkest moments" for the real-estate industry are behind them.

Besides, the company's contract sales so far this year were "satisfactory", bringing in ample cash to the company and helped it to pay back its 2011 construction debt, he said. For the first six months of this year, Fantasia recorded contract sales of about 3.35 billion yuan.

Pan also mentioned that the company is cooperating with several real-estate funds, which made its land purchase projects no longer a huge burden to the firm.

"We are willing to share part of our profits (with the funds) in exchange for the sharing of risks."

He said that cooperation is the better way for developers to survive and the integration of the industry doesn't have to be brutal anymore.

"The small and medium sized developers have already learned to share their resources by establishing joint venture companies, so no one needs to die and others could survive."

Pan said he believes the real-estate industry will stay "relatively" stable in the second half of this year as well as the first half of next year, as this is what the central government wants to sees.

He believes that Beijing won't roll out new measures to suppress the real-estate market, as the GDP growth in the mainland has already slowed down and the real-estate sector is an important contributor for the country's economic growth.

On the other hand, the real-estate price in the mainland is likely to stay stable, as it lacks motivation for the price to either go up or plunge, Pan said, adding that Fantasia has no intention to hike its average contract selling price for the rest of year.

BOCOM International analyst Alfred Lau told China Daily that he also believes that Beijing is unlikely to launch new measures targeting real-estate sector in the short term, but he stressed that the central government may enhance the execution of policies that they already have formulated.

"Currently, the housing price is facing upside risks and the central government may want to see its policies, like the property-purchasing limitations, to be executed more strictly in some cities," Lau said, adding that it could have significant impact on developers' contract sales.

Lau also pointed out that it is still too early to say whether the "worse time is behind us", as some developers had postponed the construction of their projects or reduced their construction area to cope with funding constraints, which is not what the central government wants to see.

"I believe Beijing will find a way to force developers to construct and deliver on schedule," he said, adding that if the developers needed cash, they can always cut their selling price to promote sales.

sophiehe@chinadailyhk.com

(HK Edition 09/01/2012 page2)