Mingtiandi

Asia real estate and outbound investment news

  • Facebook
  • LinkedIn
  • RSS
  • Twitter
Remember Me

Lost your password?

Register Now

Loading...
  • Capital Markets
  • Events
    • Mingtiandi 2025 Event Calendar
    • Mingtiandi APAC Residential Forum 2025
    • Mingtiandi Singapore Forum 2025
    • Mingtiandi APAC Logistics Forum 2025
    • Mingtiandi APAC Data Centre Forum 2025
    • Mingtiandi Tokyo Forum 2025
    • More Events
  • MTD TV
    • Residential
    • Logistics
    • Data Centre
    • Office
    • Singapore
    • Tokyo
    • Hong Kong
    • All Videos
    • Post-Event Stories
  • People
    • Industry Moves
    • MTD TV Speakers
  • Logistics
  • Data Centres
  • Asia Outbound
  • Retail
  • Research & Policy
  • Advertise

China’s Desperate Developers Turn to Investment Funds to Stay Afloat

2012/01/17 by Michael Cole 1 Comment

China developers set up funds in financing crisis

Following China’s clampdown on traditional funding for speculative real estate ventures, developers facing a financing gap estimated at US$111 billion are setting up their own funds in an effort to keep afloat.

About $2.2 billion of syndicated property loans and club deals will become due this year, according to data from Thomson Reuters, while a further RMB 117 billion ($18.6 billion) needs to be found to repay maturing real estate trusts.

Add in the other credit lines that need repaying and developers need to find over RMB 700 billion this year, according to Hua Xia Times, a Chinese business newspaper in Beijing.

According to a recent story in Reuters, the developers aim to raise this cash by pitching their new investment vehicles directly to China’s wealthy families.

Major developers such as China Overseas Land & Investment, Gemdale Corp, and Forte, are among the first firms to have launched their own funds. Others including China Vanke, the country’s biggest listed property firm by sales, chose to set up funds jointly with their peers to help each other survive tough times.

“We must make more friends and widen our financing sources. That will help our future growth,” Zhu Tong, chairman of Sun Real Estate, a mid-sized developer in Beijing, told an industry forum in Beijing last week.

On the upside, China’s high net-wealth families still favor property investment and funds give them an alternative to buying the physical asset while retaining exposure to the sector.

A total of 29 property funds raised $4.1 billion in 2011, a big improvement on the $2.9 billion raised by 28 vehicles in 2010, according to consultancy Zero2IPO.

Industry analysts expect more than $6 billion will be raised in 2012 and that the property fund market will expand at an annual rate of 40-50 percent over the next few years.

The funds are targetting China’s wealthy families and require a minimum investment of RMB 10 million while projecting annual returns of at 25 percent according to a recent industry report.

The balance sheets of many Chinese developers deteriorated in 2011. Greentown China , a major player in eastern China, is now struggling to survive and having to sell assets to do so.

According to many reports, developers digging into internal reserves for working capital. Internal funding, including new property funds raised, was 41 percent of total financing in the industry in the first 11 months of 2011, up from 38 percent and 33 percent in the same period of 2010 and 2009 respectively, according to the National Bureau of Statistics.

Whether or not the funds can be established (and sold) quickly enough to bail out highly leveraged developers such as Greentown remains to be seen. Most likely many small or medium sized developers will be selling distressed assets to their better-backed brethren this year, but the real estate fund sector should be playing a larger role as well.

Share this now

  • LinkedIn
  • Share
  • Tweet
  • Email

Filed Under: Real Estate Tagged With: China Overseas Land and Investment, China Real Estate Fund, China Vanke, Gemdale, Greentown China Holdings, Shanghai Forte Land

Trackbacks

  1. Fosun and SOHO Bund Deal a Bad Blind Date | Mingtiandi says:
    2012/01/17 at 9:48 pm

    […] by SOHO, and subsequently denounced by Fosun, SOHO has allegedly agreed with Shanghai Zendai and cash-strapped Greentown China to acquire their combined 50 percent stake in a 45,000 square metre commercial property south of […]

Leave a Reply

Your email address will not be published. Required fields are marked *

Get Mingtiandi Delivered

  • This field is for validation purposes and should be left unchanged.

MTD TV

Ricky Tse of GLP Capital Partners
GLP, Heitman, JLL and BEI Group See Opportunity in Hong Kong Industrial Upgrades
Francis Li
APAC Office Markets Ready to Rebound in Mid-2023: MTD TV

More MTD TV Videos>>

People in the News

EQT_David Kim
Asia Real Estate People in the News 2025-06-21
singh-anshuman
Asia Real Estate People in the News 2025-06-16
Raymond Lee Paul Hastings
Law Partner Picks Up Hong Kong Home of Former Birmingham City Boss for $37M
Teo Chee Hean Temasek
Asia Real Estate People in the News 2025-06-09

More Industry Professionals>>

Latest Stories

Chan Hung Ming Grand Ming
Bain Capital in Exclusive Talks to Acquire Hong Kong Data Centre Projects for Up to $274M
Stuart Dawes Gateway
Aussie Shed Surge Continues with $87M Gateway Portfolio Disposal
EQT_David Kim
Asia Real Estate People in the News 2025-06-21

Sponsored Features

How to Create a Win-Win for Investors and Occupiers
Lingeage Logistics Cold Storage Complex
Mount Maunganui Cold Storage Facility for Sale
7 in 10 Senior Directors Confident in Data Centres, but Talent Shortage Will Widen

More Sponsored Features>>

Connect with Mingtiandi

  • Facebook
  • LinkedIn
  • RSS
  • Twitter

Real Estate News

  • Capital Markets
  • Mingtiandi 2025 Event Calendar
  • MTD TV Archives
  • People
  • Logistics
  • Data Centres
  • Asia Outbound
  • Retail

More Mingtiandi

  • About Mingtiandi
  • Contact Mingtiandi
  • Mingtiandi Memberships
  • Newsletter Subscription
  • Advertise
  • Terms of Use
  • Privacy
  • Join the Mingtiandi Team


© 2007-2025 China Advertising Media Ltd (Samoa). All rights reserved.

We use cookies in accordance with our Privacy policy to provide the best user experience on Mingtiandi and to safeguard user data. By continuing to browse you consent to the policy. AcceptRefuse