ThreeChinese research institutions jointly released a report over the weekend outling the performance of listed real estate enterprises in 2008, revealing that both the overall income growth rate and average profit had declined.

The report covered 115 real estate enterprises listed on the Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE), as well as 28 mainland enterprises listed on the Hong Kong Stock Exchange (HKEX).

It was cooperatively produced by the Enterprises Research Institute of the Development Research Center under the State Council, the Real Estate Research Institute of Tsinghua University and the China Index Research Institute.

The average operating income of the selected 115 companies listed on SSE and SZSE in 2008 was 1.867 billion yuan ($273.23million), up 10.54 percent year-on-year.

However, the growth rate was much lower than last year’s 55.24 percent.

The average operating income of mainland companies listed on HKEX was 5.251 billion yuan ($768.47million), up 5.23 percent year-on-year.

The average profit of the companies on SSE and SZSE in 2008 was 361 million yuan ($52.83million), down 1.10 percent year-on-year. The average profit of the companies listed on HKEX was 1.863 billion ($272.65million), down 30.15 percent year-on-year.

The decline in profit margins was attributed to the fall in the price of real estate and rising costs, the report concluded.

Reducing cost, limiting expansion and increasing cash flow may be a short-term strategy for real estate firms, said Liu Hongyu, deputy of the Real Estate Research Institute.

“The development future of the real estate industry is highly related to the microeconomic situation,” said Zhang Zhengjun, director of the Enterprises Research Institute.

Chinese real estate enterprise faced big challenges in 2008, the report stated.

The researchers are optimistic about industry leaders.

Gradual mergers in the industry will be further intensified this year, the report said.