Fourteen of the 78 state-owned firms whose core business is not real estate pulled out of the property market last year following a central government order in March, a senior government official said yesterday.

Another more than 20 companies are expected to follow suit this year, Shao Ning, deputy director of the State-owned Assets Supervision and Administration Commission, parent of the 78 firms, told a media briefing held by the State Council's Information Office.

"Government-controlled enterprises should always concentrate on their core businesses to seek growth which has remained a SASAC basic requirement over the past few years," Shao said. "In general, the withdrawal process has been quite smooth."

In a statement posted on its website in March 2010, the SASAC said companies supervised by it whose core business is not real estate should map out plans to withdraw from the sector within 15 working days. However, the SASAC didn't lay down a deadline to complete the exit and companies were told to get out after their current property projects are completed.

Cash-flush state-backed entities have been criticized for bidding up land prices to record levels and keeping smaller property firms out.

"As the 78 non-designated developers have a small market share, their exit from the industry basically reflected a government stance rather leave any major impact on the country's property market," said Song Huiyong, research director at Shanghai Centaline Property Consultants Ltd, operator of the city's largest estate chain. "The government wants to deliver a message that less capital would be injected to the over-heated real state industry."

Government-backed firms whose core business is not real estate are banned from public land auctions and have to exit the sector as soon as their existing land banks are used up, according to the SASAC.

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