Evergrande Defaults Boost Chinese Bond Yield Spreads and More Asia Real Estate Headlines

The ongoing financial crisis facing some of China’s largest developers continued to dominate the headlines today with investors pushing spreads for Chinese high yield bonds to record highs as Evergrande Group continues to crumble and a range of smaller builders struggle to meet their financial obligations.

More news reports are showing mainland local governments taking steps to revive the housing market as property demand slides, and in news from other points around the region, Hong Kong’s office market may have stopped contracting in the third quarter and one agency is predicting a record jump in cross-border deals in Asia Pacific next year.

Evergrande Crisis Drive China Bond Yield Spreads to Record Highs

Worries over possible spiralling effects of a debt crisis at developer China Evergrande Group drove Chinese high-yield spreads to record highs on Wednesday, days after the company missed another dollar bond deadline.

The company, which has more than US$300 billion in liabilities, on Monday missed its third round of interest payments on its dollar bonds in three weeks even as other firms warned of defaults. Read more>>

Mainland Cities Roll Out Incentives as Housing Market Slides

Harbin, in China’s northeastern Heilongjiang province, is providing subsidies of up to 100,000 yuan (US$15,497) for homebuyers under 35.

The city, a provincial capital, said it would also encourage developers with good credit profiles to re-embark on presale activity sooner than allowed earlier. Such companies can now apply for presale permits for each block, as long as work on one floor of a tower higher than eight storeys or two floors of a tower less than eight storeys has been completed. Earlier, its government said in 2019 that presale permits could can only be approved when two-thirds of a block had been fully completed. Read more>>

Funding by China Property Trusts Fell 40% in September

Fundraising by Chinese property trust products tumbled over 40% in September from a month earlier, official Shanghai Securities News reported on Monday, as China Evergrande Group’s troubles further dampen investor appetite toward the struggling sector.

Newly-launched real estate trust products raised 16.2 billion yuan from investors in September, down 44.8% from the previous month, the newspaper said, citing data from investment advisory Usetrust. That follows a 24% decline in August, and a 25% fall in July. Read more>>

Hong Kong Office Market Showed a Spark in Q3

Hong Kong’s office rental market is showing signs of recovery after being battered by 2019’s social unrest and the Covid-19 pandemic that immediately followed it.

The three months to September saw “net absorption” for the first time in two years, meaning more space was taken up than left empty, according to Cushman & Wakefield. Read more>>

APAC Cross-Border Real Estate Pegged to Jump 30% in 2022

IT will be a record year for cross-border real estate investment in 2022 in the Asia Pacific (APAC) region, with investment volumes expected to grow by a third, said Knight Frank on Wednesday (Oct 13).

The office sector in particular is forecast to attract over half of all inbound investment into the region, with the most popular locations being Greater China, Japan and Australia. Read more>>

CapitaLand China Trust Raises $111M After Mainland Shed Buy

CapitaLand China Trust (CLCT) on Wednesday priced its private placement at S$1.165 ($0.86) per new unit, which is the bottom end of the price range.

The China-focused real estate investment trust (Reit) also exercised its upsize option fully, bringing the total amount raised to S$150 million ($111 million) and the total number of units to be issued to 128.8 million. Read more>>

Sino-Ocean Capital Takes Control of Manager of SGX-listed Dasin Retail Trust

New Harvest Investments, an affiliate of Sino-Ocean Capital, has become a controlling shareholder of Dasin Retail Trust’s manager after Zhang Zhencheng, chairman and controlling shareholder of the Trust’s manager, completed the transfer of his shares, the trust said in a filing to SGX Tuesday.

“We are pleased to have established this strategic partnership with Sino-Ocean Capital, a leading real estate fund management company and reputable alternative asset management company in China,” Zhang said in the statement. “Together, we will jointly explore business opportunities and work together seamlessly to take the Trust into the next stage of growth.” Read more>>

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