China’s property developers are thriving once again
Last September, China’s third-biggest real estate developer said something that sent shivers throughout the country and beyond. China Vanke Co.’s goal for the next three years would be simply “to survive,” its chairman Yu Liang warned. This was a startling admission from one of the few investment-grade companies in the sector, acknowledging the severe squeeze from Beijing’s deleveraging campaign. Yu’s remark was timely. Shortly afterwards, the average yield for Asia’s dollar junk bonds, which is largely determined by Chinese property developers’ notes, soared. What a difference six months makes. Now real estate companies are thriving. This year, Vanke managed to quickly sell more than 70 percent of 126 luxury apartments available at the launch of a new riverside project in Shanghai. They were priced between 25 million yuan and 35 million yuan ($3.7 million and $5.2 million) each, a pretty striking sign of returning confidence. On average, sales at listed Chinese property developers should increase by 18 percent this year, according to estimates from Credit Suisse Group AG. Most importantly, developers can refinance again. Yuzhou Properties, a junk-rated real estate group, has been given the nod by regulators to issue 3.5 billion yuan of notes after a dry spell of two long years.
Tags : INTERNATIONAL