(Yicai) March 22 -- The Chinese real estate market is still in an adjustment phase as the presence in first- and second-tier cities and sales of state-owned enterprises are growing, according to a recent report.

Property sales of SOEs among China’s top 100 property developers accounted for nearly 67 percent of the total last year, up 3.3 percentage points from the previous year, mainly because they primarily invested in first- and second-tier cities and had sound operation and financing advantages, according to a report released by the China Index Academy yesterday.

Land acquisitions made by China’s top 100 real estate developers increased last year, given the low case the previous year and accelerated land promotion at the end of the year. They spent CNY853.9 billion (USD118.2 billion) in land acquisitions in 2023, up 16 percent from 2022, the CIA report showed. Centrally administrated and state-owned companies invested heavily and remained the main land buyers last year.

In terms of sales, the country’s top 100 developers sold 260 million square meters of properties for CNY5.4 trillion (USD747.5 billion) last year, down 7.4 percent and 5.8 percent, respectively, from the year before, according to the report.

China’s top 100 real estate firms achieved an average revenue of CNY39.5 billion (USD5.5 billion) last year, up 7.4 percent from the previous year, but their average net profit declined nearly 17 percent to CNY2.1 billion (USD290.7 million), with net profit margin and return on net assets at about 5 percent and 3 percent on average, respectively, the report showed.

It will be difficult for real estate companies to rely solely on property development to maintain their revenue size in the medium and long term, as their business scale has already reached the ceiling, the CIA noted. Therefore, developers must consider how to maintain profitable development, it added.

Editor: Futura Costaglione