Sunac China Says Sales to Exceed $8.2 Billion as Rich Buy

Sunac China Holdings Ltd. (1918), the Chinese developer in which buyout firm Bain Capital LLC has a stake, expects home sales to rise at least 11 percent this year from last year amid strong demand from rich buyers.

The developer’s home sales will exceed 50 billion yuan ($8.2 billion) this year as it focuses on mid-to-high-end properties in major cities including Beijing and Shanghai, Chairman Sun Hongbin told reporters in Suzhou, a city west of Shanghai, on Oct. 17. The Tianjin-based homebuilder in January forecast sales of 45 billion yuan for 2013.

Sunac is expanding amid resilient demand for luxury housing in big cities even as the government maintains residential curbs, Sun said. New home prices in China’s four major cities rose in August the most since January 2011, led by a 19 percent jump from a year earlier in Guangzhou in southern China, according to data issued Sept. 18 by the National Bureau of Statistics.

“I’m very confident in Beijing and Shanghai as there’s so much demand from everywhere,” Sun said. “They are first-tier world-class cities. There’s no single China property market we are talking about, because markets in big cities are hot, while in some other cities the market is very cold.”

Sunac sold 36.4 billion yuan of homes in the first nine months of the year, about 81 percent of its sales target for 2013, according to a statement on its website.

Average Prices

Average selling prices of Sunac projects in Shanghai are between 60,000 yuan and 70,000 yuan per square meter (10.76 per square feet), according to Sun. China’s new-home prices jumped 9.5 percent in September from a year earlier to 10,554 yuan for each square meter, according to SouFun Holdings Ltd. (SFUN), the country’s biggest real estate website owner.

Sunac shares, which trade in Hong Kong, rose 0.8 percent to HK$5.24 at the close of trading, the biggest gain in almost two weeks. The stock is down 13 percent so far this year, compared with a 2.4 percent advance in the Bloomberg Asia Pacific Real Estate Index, of which Sunac is a constituent.

Sun acquired 19.8 million shares of his company from Sept. 19 to Oct. 2 for about about HK$98 million ($13 million), according to data compiled by Bloomberg. Sun owns 48 percent of the Sunac, while Bain Capital owns 5.4 percent, according to the data.

Specific property-related policies are unlikely to come out of a Communist Party meeting in November even as President Xi Jinping and his leadership team are preparing to discuss deepening reforms, Sun said.

“The government may let the market play a bigger role in the high-end property market, while emphasizing social-housing construction in the lower end,” said Sun, who also expects a property tax to be introduced in more cities beyond Shanghai and Chongqing.

Prime Land

The company holds about 10 billion yuan of cash and cash flow remains healthy even after the developer paid record prices for land in the past several months, Sun said.

Sunac bought a residential site in Beijing on Sept. 4 for 73,000 yuan a square meter of floor area, a record high for the country, according to Haitong International Securities Co. Sun said it was a “reasonable price” for a prime urban location and the company plans to sell homes that will be built on the site for at least 150,000 yuan per square meter. There currently isn’t any suitable land to buy, Sun said.

The developer and Greentown China Holdings Ltd. (3900) are building villas that model Chinese ancient gardens in Suzhou, which are designated a World Heritage site by the United Nations Educational, Scientific and Cultural Organization. The Peach Blossom Spring project will start sales at the end of the month for at least 20 million yuan per unit, according to Sunac.

Hangzhou-based Greentown will “have no problem” exceeding its property sales target of HK$50 billion for 2013, while China’s property market will be stable for the rest of the year without big fluctuations, executive general manager Fu Linjiang said in an interview in the city on Oct. 18.

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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