Skip to comments.China property developers pull down shutters, hoard cash
Posted on 09/19/2013 5:47:53 AM PDT by TexGrill
(Reuters) - China's biggest property developers are sitting on $25 billion in cash as they prepare for a possible credit crunch and another round of crackdowns on real estate speculation.
Companies including Shimao Property Holdings Ltd (0813.HK) and Greentown China Holdings Ltd (3900.HK) raised more than $16 billion in offshore bonds and loans over the first eight months of 2013 - about 36 percent more than in all of 2012. But they have turned more cautious about investing, leaving much of that money on their balance sheets.
China's property sector is a pillar of growth in the world's second biggest economy, accounting for 15 percent of the gross domestic product in the first half of the year. China data released on Wednesday showed new home prices in August rose at the fastest pace in 2-1/2 years strengthening the case for government cooling measures.
Reuters has analyzed data on 76 Chinese property developers that reported June-quarter results, and found that while their cash and short-term investments spiked, their capital spending plans were more conservative.
Thomson Reuters StarMine SmartEstimate data shows China's real estate management and development companies' total capital expenditures are expected to fall 11 percent in the next 12 months, a sharp contrast with property peers in the broader Asia-Pacific region where capex is forecast to rise 6.6 percent.
(Excerpt) Read more at reuters.com ...
China sits on the granddaddy of all real estate bubbles. Thanks to the toxic influence of central planners, they committed and squandered over a trillion dollars building entire “ghost cities”. Residential units of all sorts, public venues, shopping malls and commercial office buildings sit vacant and deteriorating. There is no return on investment. Urban real estate values are kept artificially high on bank ledgers to “hide” this catastrophe. All sounds very familiar.
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