(Yicai) Jan. 10 -- China’s program to ensure the timely delivery of housing projects, that was introduced by regulators last year, is having results, with a handover rate of over 76 percent last year, according to the latest data.

More than 2.68 million units of the 3.5 million buildings supported by the government's guarantee program were delivered last year, according to a report by market research firm Yihan Consulting

Size is a big factor in the timely handover of developments, Yihan Consulting said. The top five developers each accounted for at least 200,000 of the finished properties and the top 10 made up more than half.

Country Garden Holdings ranked first, handing over 600,000 homes during the course of the year. China Vanke and Sunac China followed with 300,000 each, while China Poly Group, Greenland Holdings and China Overseas Property Holdings delivered more than 200,000 units apiece.

Many developers also finished their projects early. China Overseas Property Holdings, Zhuhai Huafa Properties and Longfor Group Holdings delivered more than 20 percent of their properties ahead of time, according to Yihan Consulting. While Midea Real Estate Holdings achieved an early delivery rate of 70 percent.

By handing over housing early, it helps to stabilize market expectations and boost home buyers’ confidence to a certain extent, Liu Shui, director of think tank China Index Academy, told Yicai.

The program to ensure the timely delivery of homes has also spurred development projects. From January to November last year, the completed housing floor area jumped 17.9 percent from the same period in 2022 to 652 million square meters, according to data from the State Statistics Bureau. Of this, residential floor area surged 18.5 percent to 476 million square meters.

There are likely to be fewer ‘guaranteed’ buildings this year, but there will still be a lot of pressure to deliver on time, many real estate firms said.

Most of the real estate projects begun before 2021 have been delivered, and the peak period for guaranteed delivery has now passed, according to a CITIC Securities research report. As of the third quarter of 2023, the contract liabilities of a number of developers dropped by about 30 percent from the same period last year.

Tight Cash-flow

Capital is still the biggest pressure with regards to deliveries. The vast majority of developers are likely to be under great pressure in terms of cash flow in the first half of the year, said Yuan Chengjian, co-founder of Jiancheng Shengye.

Some industry insiders said that sales are not good and there is no repayment. Also, many of the extended loans from banks will expire this year, so the source of funds is still a problem.

Preliminary estimates show that as of the end of 2023 there was still a CNY4 trillion (USD557.5 billion) funding gap for those ‘guaranteed’ projects, Wu Ge, chief economist of Changjiang Securities, said in a recent report. It is still not enough to only rely on sales income to plug this gap, he added.

Editor: Kim Taylor