(Yicai Global) Jan. 7 -- Debt repayments by Chinese real estate developers will break the CNY1 trillion (USD154.9 billion) level this year for the first time after years of increased borrowing, piling even more pressure on these companies, the Securities Times reported today.
The sector’s bond repayments will reach CNY1.09 trillion -- CNY408.3 billion (USD63.2 billion) of overseas debt and CNY374.4 billion of corporate notes, according to the China Index Academy. That will fall back to CNY785.6 billion next year and about CNY800 billion in 2023.
Last year, developers paid back about CNY915.4 billion, an almost 29 percent year-on-year increase, statistics from the Beike Real Estate Research Institute showed. The size of debt due this year is expected to hit CNY1.24 trillion, a 36 percent jump and an historic move past CNY1 trillion.
Real estate financing continued to swell as the start of this year. Chinese property firms raised more than USD4.5 billion in US dollar debt in the first six days of 2021, according to the Centaline Property Research Center.
Industry insiders believe that the main reason for the current financing blowout is that developers plan ahead and increase financing to avoid possible policy risks.
On Dec. 31, the People’s Bank of China and the China Banking and Insurance Regulatory Commission adjusted the loan ratio of real estate banking financial institutions, set up a real estate loan concentration management system for banking financial institutions, and extended the regulatory upgrade to the end of the year, while revealing their determination for financial supervision in 2021.
Looking to the future, the Beike Real Estate Research Institute believes that in the context of risk prevention, developers’ financing difficulties will continue to escalate. Bond sales will remain low throughout the year as more real estate companies reduce the burden under the impact of the new financing regulations. Small- and medium-sized businesses may be the first to feel the pressure.
Last year, total financing at 95 typical real estate firms was CNY1.52 trillion, a 0.1 percent gain, while the collective domestic and foreign bond debts of property firms was about CNY1.21 trillion, a record high. But the growth rate has narrowed for two consecutive years, the report said, citing data from several research institutions.
Editor: Peter Thomas