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Sumitomo Realty Posts 59% Gain in Profit on Rising Home Demand

Sumitomo Realty & Development Co. (8830), Japan’s third-biggest developer, reported first-half profit rose 59 percent as it sold more homes before the government’s plan to raise the sales tax next year.

Net income rose to 41.9 billion yen ($425 million) in the six months ended Sept. 30 from 26.4 billion yen a year earlier, the Tokyo-based company said today in a statement through the stock exchange. Sales gained 25 percent to 391.5 billion yen.

Demand for homes is increasing as the government plans to raise the consumption tax to 8 percent from 5 percent in April and amid concerns that interest rates will start to rise as the central bank’s policy of ending deflation will stimulate economic growth and push up prices. Sumitomo Realty said it sold 75 percent more apartments, houses and land sites in the fiscal first half compared with the same period year earlier.

Sumitomo Realty kept its net income forecast unchanged at 68 billion yen for the year ending March 2014 on sales of 760 billion yen.

Japan’s housing starts rose for a 13th month in September, the longest streak since 1994.

The shares declined 1.2 percent to 4,600 yen at the close of trading in Tokyo following the results. The stock has gained 62 percent this year, outperforming the 53 percent advance by the 43-member Topix Real Estate Index in the period.

To contact the reporter on this story: Kathleen Chu in Tokyo at kchu2@bloomberg.net

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

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