Developer Financing Pressure Rising Amid Slowing Sales and Tight Credit

Sales are falling and speculative fever is coming out of the first-tier. In Beijing, new rules for school attendance has crushed “school” housing. One property fell nearly 1 million yuan, 11 percent, but still can find no buyers.
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Slowing sales are a problem for developers because sales are an increasing source of funding amid the country’s regulatory crackdown and deleveraging efforts.
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Zhang Dawei that, in the control policy, the property market in 2017 cool down, which brought a certain operational risk. Part of the housing prices in 2016 took some high prices, in this case, the future is expected to rise in housing prices is high, and regulation led to the difficulty of rising house prices is very large. 2017 capital costs gradually increased, the pressure of various financing channels gradually increased, for many housing prices, the capital chain risk is gradually accumulated.

Cloud room data analysts pointed out that the financing difficulties in housing prices, financing the context of expensive, sales back to become part of the main source of funds for housing prices. April 2017, sales accounted for 51.2% of the source of real estate funds, the chain rose 1.1 percentage points, an increase of 4.2 percentage points. With the decline in market transactions, housing prices back to the pressure of sales, while domestic and foreign debt due to limited costs and a substantial increase in housing prices trust financing more stringent supervision, housing prices are expected to face greater financial pressure and higher The financial cost.

However, Zhang Dawei that large-scale housing prices by virtue of the scale, brand and low financing costs and other advantages, there is still a large space for maneuvers. In 2016, many large housing prices to seize the advantages of low-cost bonds, has replaced most of the early high-cost liabilities. And benchmarking enterprises can be acquired through mergers and acquisitions, to buy real estate stocks to increase land reserves, and the layout of diversified investment.

China Evergrande announced on June 5 that the company after the redemption of 56.18 billion yuan in permanent debt, the redemption of permanent debt 24.38 billion yuan, has accumulated redemption debt 80.56 billion yuan, and Plan to redeem all remaining permanent debt before June 30, 2017.

Country Garden President Mo Bin said that the first half as far as possible in advance to push the disk in order to get more cash flow, to cope with the possible arrival of the real estate cycle, seize more opportunities. While the Poly side in the investor conference call that is expected to be tight in the second half after the liquidity may have an impact on sales, subjectively in the first half to speed up the progress of pushing goods.

While small and medium-sized housing prices are expected to face a more difficult situation. Although the sales carried forward to the operating income there is a certain time difference, but in the context of regulation, part of the project reserves less capital costs of small and medium-sized housing prices have been showing weakness. Wind data show that the current interim results have been announced housing prices, many small and medium-sized housing prices decline or even a loss.

Guotai Junan fixed income analysts pointed out that the real estate cycle in 2017 weakened, internal and external liquidity worrying, external financing contraction trends need to pay close attention to, especially in the early radical financing expansion of highly leveraged small and medium-sized developers funding chain is more sensitive, will face increasingly The bigger the project is sold and the liquidity pressure.Zhang Dawei that, in the control policy, the property market in 2017 cool down, which brought a certain operational risk. Part of the housing prices in 2016 took some high prices, in this case, the future is expected to rise in housing prices is high, and regulation led to the difficulty of rising house prices is very large. 2017 capital costs gradually increased, the pressure of various financing channels gradually increased, for many housing prices, the capital chain risk is gradually accumulated.

Cloud room data analysts pointed out that the financing difficulties in housing prices, financing the context of expensive, sales back to become part of the main source of funds for housing prices. April 2017, sales accounted for 51.2% of the source of real estate funds, the chain rose 1.1 percentage points, an increase of 4.2 percentage points. With the decline in market transactions, housing prices back to the pressure of sales, while domestic and foreign debt due to limited costs and a substantial increase in housing prices trust financing more stringent supervision, housing prices are expected to face greater financial pressure and higher The financial cost.

However, Zhang Dawei that large-scale housing prices by virtue of the scale, brand and low financing costs and other advantages, there is still a large space for maneuvers. In 2016, many large housing prices to seize the advantages of low-cost bonds, has replaced most of the early high-cost liabilities. And benchmarking enterprises can be acquired through mergers and acquisitions, to buy real estate stocks to increase land reserves, and the layout of diversified investment.

China Evergrande announced on June 5 that the company after the redemption of 56.18 billion yuan in permanent debt, the redemption of permanent debt 24.38 billion yuan, has accumulated redemption debt 80.56 billion yuan, and Plan to redeem all remaining permanent debt before June 30, 2017.

Country Garden President Mo Bin said that the first half as far as possible in advance to push the disk in order to get more cash flow, to cope with the possible arrival of the real estate cycle, seize more opportunities. While the Poly side in the investor conference call that is expected to be tight in the second half after the liquidity may have an impact on sales, subjectively in the first half to speed up the progress of pushing goods.

While small and medium-sized housing prices are expected to face a more difficult situation. Although the sales carried forward to the operating income there is a certain time difference, but in the context of regulation, part of the project reserves less capital costs of small and medium-sized housing prices have been showing weakness. Wind data show that the current interim results have been announced housing prices, many small and medium-sized housing prices decline or even a loss.

Guotai Junan fixed income analysts pointed out that the real estate cycle in 2017 weakened, internal and external liquidity worrying, external financing contraction trends need to pay close attention to, especially in the early radical financing expansion of highly leveraged small and medium-sized developers funding chain is more sensitive, will face increasingly The bigger the project is sold and the liquidity pressure.

Author: 罗臻 http://www.investinginchinesestocks.blogspot.com

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