China Vanke, the largest mainland-listed property developer, expects to develop more affordable residential projects in the next few years, in line with the central government's cool-down measures in the sector.

"We will build more homes covering less than 90 square meters each in the next two years," said China Vanke's Chairman Wang Shi.

"We hope that in two years' time the number of apartments of less than 90 square meters will amount to 40 to 45 percent of the total number of apartments that we build," Wang added.

Wang's remarks came not long after Beijing launched a series of new measures requiring at least 70 percent of all new residential property projects in China to be homes with floor areas of less than 90 square meters.

"The number of 90-square-metre apartments that we build will keep rising to 50 percent or above the total in the near future," Wang said.

"We will achieve this goal by helping the government build apartments and units for people with low wages," he said.

Wang told reporters yesterday that China Vanke's cooperation with China's local governments to build so-called social welfare apartments and units had already begun this year.

"We used land of 20,000 square meters previously owned by China Vanke in Guangzhou and built upon it 300 residential units to lend to 1, 000 people, most of whom are workers with their monthly wage well below the average," Wang said. "We hope to do more projects like this later in Shenzhen, Shanghai and other cities."

Wang was not concerned that building social welfare apartments and units would tighten the company's bottom line.

"Carrying out this type of project will help people in need while strengthening China Vanke's public image, which I believe will well offset the influence brought by the thin profit margin, especially from a long-term perspective," Wang said.

With the Pearl River Delta, Yangtze River Delta and Bohai Rim Region as its key property development areas, China Vanke saw its total land reserve and revenue reach 901,000 square meters and 6.15 billion yuan (US$768 million) for the six months ended on 30 June 2006, representing an increase of 51.9 percent and 53.2 percent year-on-year, respectively.

During the same period, China Vanke realized a sales area of 1.22 million square meters, up 33.2 percent from the corresponding period last year. Its sales revenue in turn jumped to 7.39 billion yuan (US$923 million), up 27 percent from a year ago.

As such, China Vanke reported an increase of 52 percent in turnover to 6.24 billion yuan (US$780 million) as the company announced its 2006 interim results yesterday. Its net profit also surged by 58.9 percent from the previous year to 1.27 billion yuan (US$158 million).

In the first half of 2006, China Vanke acquired 36 new projects, taking its land bank to 15.65 million square meters in terms of gross floor area by the end of June 2006.

To finance its future development, such as resource integration and property project acquisition, China Vanke would raise about 4.2 billion yuan (US$525 million) by private placement of about 700 million A shares.

China Resources, China Vanke's largest shareholder that currently holds a 15.17 percent stake, agreed to buy no more than 110 million new shares from China Vanke. The new share sale will push up China Resources' shares in China Vanke to 15.7 percent of the total.

(China Daily August 2, 2006)