Greentown Sale to Sunac May Be Cancelled After Regulatory Delay

The biggest property developer to change hands during China’s real estate downturn may not be sold after all, following difficulties getting the share sale approved by the Hong Kong Stock Exchange.

Tycoon Song Weiping, along with this family and close associates, agreed to sell their controlling stake in Greentown China Holdings to sometimes partner Sunac Holdings for HK$6.3 billion (US$812) million) during May.

Now, in addition to the rumoured regulatory hurdles, Song may also be backtracking on the deal as China’s home sales, particularly in Hangzhou, are showing signs of improvement.

Song Says Share Sale is Going Forward Despite Rumours

During the past weeks China’s real estate market has been flooded with rumours that Song’s agreement to sell up to 30 percent of the 43 percent stake held in Greentown by himself, his wife and a close associate was being cancelled.

According to unconfirmed reports, Song’s deal did not meet the requirements of the Hong Kong exchange, because the shares had been offered only to Sunac, without giving other shareholders such as Wharf Holdings, a chance to purchase the shares.

While Song has denied the rumours, there has also not been any evidence of progress of the deal which was first announced nearly six months ago.

Market Upturn May Be Changing Song’s Mind

Besides the slow progress on the share sale, the stories of the merger’s demise have also been fuelled by a change in the market which makes the Hangzhou-based developer’s situation look considerably more positive than it did during May.

Greentown, which focussed on luxury housing in Zhejiang province, particularly around its hometown of Hangzhou, was hit hard when its home market became the epicentre of China’s housing downturn.

As recently as August, Hangzhou home prices led the nation downward by falling 2.1 percent compared to July, according to figures from the National Bureau of Statistics.

By September, however, Hangzhou prices were falling by only 1.17 percent, and some reports have indicated that home sales volumes set records recently, with RMB 2.3 billion of new housing being sold in a single month.

“Stupid Officials” May Be Indirectly Bailing Out Greentown

At the time that Song announced his plan to sell his shares in Greentown, the developer blamed “stupid officials” for the hard times that have forced him to sell out to Sunac.

Now, however, it may be that same officialdom that is making it possible to give Greentown another go.
The improving sales volumes that Song and Greentown have been enjoying come largely thanks to the removal of home purchase restrictions earlier this year, as well as new mortgage policies that have encouraged lending for home purchases in recent months.