Shenzhen Says Some Project Freezes Are Routine

Authorities in Shenzhen finally shed some clarity late yesterday on the government freezes of property sales that have shaken the country’s real estate firms, saying that at least some of the regulatory moves were routine.

According to a statement on the Weibo microblog account of the Shenzhen Urban Planning and Land Resources Committee, the lockdown on transactions that it had ordered on subsidised housing projects, including 2,800 apartments belonging to seventh-ranked developer China Overseas Land and Investment, were part of normal procedures for the government-funded projects.

The announcement is expected to calm some of the widespread investor panic that caused many property shares to slide sharply yesterday, although it does not clear up questions regarding other developers, including Kaisa Group, which have had sales frozen at non-subsidised projects.

Land Office Urges the Public to Keep Calm

While the authorities in Shenzhen have yet to make any public statement regarding why deals have been shut down at the four Kaisa projects which were hit with bans last month, it was more forthcoming about measures announced for subsidised housing projects.

The government office said that a lock-up of transactions is normal at subsidised housing projects, once the units have all been sold off by the developer. Such a procedure could be used to prevent recipients of the cut-rate housing from attempting to profit from re-sales of the property.

The announcement from the land bureau appears to be aligned with statements from China Overseas Land to the Hong Kong stock exchange on Friday, which said that the sales ban “was due to normal administrative measures and procedures adopted by the relevant land authority of the PRC government in Shenzhen.”

China Overseas had already made it clear in its Friday announcement that all 2,800 units where sales were frozen had already been purchased by customers.

Kaisa and Company Still Not Off the Hook

While China Overseas appears to be in the clear, there are still a number of other developers in Shenzhen for whom the sales bans still loom large.

There has still been no explanation of the sales bans at Kaisa’s four projects, which occurred in December, and it is not clear which projects with sales freezes are included in the explanation given by the land bureau’s announcement yesterday.

Six Developers Now Have Sales Frozen in Shenzhen

Including China Overseas and Kaisa, six developers are now known to have sales frozen at projects in Shenzhen.

As reported here yesterday, China Merchants Property Development has had sales blocked for 2,300 apartments in the southern city, and according to a story in the South China Morning Post, developers Rongchao Real Estate and Dong Dao Real Estate both have had sales blocked at more than 1,400 homes since December.

Another developer, Fantasia, has seen its share price and bonds drop precipitously this week because of news that some sales at its projects are frozen, however, the government measures in that case appear to only apply to four homes.