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Management Discussion and Analysis -
Market Review
Glorious Property
Annual Report 2011
Market Review
In 2011, the Central Government of China maintained stringent austerity measures towards the property sector, aiming
to further curb the investment and speculation activities and facilitate the reasonable decline of the housing price.
These measures were to ensure steady and healthy development of the property sector. During the year, home purchase
restriction was implemented in more than 40 major cities nationwide and the price limitation was also implemented
in certain cities. As pilot cities, Shanghai and Chongqing implemented property tax since the beginning of the year.
Besides, the Central Government of China successfully prevented investment speculative funds from getting into the
property sector via tightening bank lending and implementing differentiated credit policies on the first house and other
houses.
Austerity policies had played a positive role in stabilising the property sector. Property investment and the growth rate of
residential sales had dropped. At the same time, the austerity policies also lead to the decrease of effective demand from
the market by changing the expectations of buyers and the wait-and-see sentiment of buyers was getting strong. Growth
of transaction volume for commodity houses nationwide was slowing down in the second half of the year. The overall
transaction volume in the property market of first- and second-tier cities fell significantly compared to that of 2010.
Under the severe pressure of the Central Government, adjustment emerged in housing price, resulting in deteriorating
business environment for property developers who faced with tough market challenges.
During the year, faced with stringent austerity measures in real estate and changes in the market, the Group responded
actively to adopt different sales strategies, moderately price-cutting strategies and flexible and feasible marketing
strategies for cities and projects with different characteristics. The Group moderately fastened the development speed,
sales pace of existing projects and promotion pace of new projects, in order to ensure a fast recovery of the sales funds. As
a result, the Group achieved a better sales performance compared to that of 2010.