Friday, April 15, 2011

China Maintains Ban on Property Developers Raising Funds

China upholds fundraising ban on property developers
To calm the property market, China has virtually suspended all fundraising plans by developers for over a year, whilst ordering banks to cut lending to real estate firms.

"All refinancing applications from listed developers have to be approved by the Ministry of Land and Resources," said Zheng Li, a senior official at the China Securities Regulation Commission.

They don't mention why off-shore fundraising is being tolerated.

In other, not fully implemented news, the total value of first quarter home sales rose 27% from the same quarter last year.

China Home Sales Rise in 1st Quarter Defy Intensified Curbs
“While these growth rates are below ones seen in early 2010, they remain high relative to what developers are reporting and what the policy tightening would have suggested,” Citigroup Inc. analysts including Ken Peng said in a report today. “We see this as a sign that the tightening probably has not yet been fully implemented at the local level. ”

1 comment:

jesse said...

Maybe offshore $ is being tolerated because that's the way it should work -- China should be a net receiver of FDI, not the other way round.

My question is where will Chinese developers end up finding the $ to finance their projects? Should the developed world expect junkets from China? I'm keeping my ear to the ground trying to uncover Chinese property investment schemes being marketed to developed-world people, starting with Chinese expats.

In Vancouver there has been some elevated direct investment in property (i.e. not heavily financed through a bank) for detached dwellings: an investor scouts a buildable lot, finds investors through whatever means to front a large DP, and bridge finance the rest. Many of these investors are of Chinese descent, either local or foreign. The secondary financing market is obviously at play in parts of Vancouver -- and admittedly I don't know the magnitude of this -- but I'm sure pales in comparison to certain schemes going on in Mainland China. If bridge financing through state banks is that much harder to come by there will be pressure and better terms for these investors to look back to China.