Canton Properties

London-listed Canton Property Investment, which develops malls in China, has said its executive chairman had disappeared and its shares had been suspended while the firm sought extra funding.

The Hong Kong-based company, incorporated in early 2007, said in a statement that the executive chairperson, Keng Wong had ‘recently been absent from the company and uncontactable.’

Wong’s secretary told Reuters she had not seen him since August, while executives at the company were unavailable for comment.

Canton Property is investing in projects in the southern Chinese city of Guangzhou, where property prices have dropped by as much as 30% in the last year after booming for years.

In March, the company said it had bought from Keng Wong and a business partner, Ye Zhuansong, a 100% stake in a mixed-use property project in Guangzhou for about $350 million.

The project, called Canton Finance Center and including shopping space, offices, serviced apartments and a hotel, would be worth about $1.2 billion when completed, the firm said at the time. But in its statement yesterday, Canton Property said it was seeking funding for the project.

Canton’s non-executive director David Brewer, who held the largely ceremonial post of the Lord Mayor of London in 2005 and 2006, resigned after a board meeting on Wednesday failed to agree on the appointment of an interim chairman.
Source: Reuters

Shanghai apartment

In Shanghai the real estate scene has changed since the beginning of 2008 — the number of property transactions has dramatically dropped, prices have soared and investors are turning to second and third tier cities for investment opportunities.

Shanghai´s residential property market appears dormant in some respects, with a plethora of buyers who have adopted a ´wait-and see´ attitude contributing to the decrease in performance since last year.

The decline of real estate transactions  in Shanghai has stunted individual mortgage lending.

The latest report from real estate advisers DTZ shows the number of major transactions (each valued at US$10 million or above) plunged dramatically from 17 in the first half of 2007 to eight in the first half of 2008.

According to the DTZ report, serviced apartment transactions in Shanghai accounted for two out of three such transactions in the whole of China.

In the first half of 2008 investment transaction value in the national serviced apartment sector rose from US$138 million to US$416.65 million — an increase of 201.9% year-on-year. At the same time the number of transactions decreased by 40% from the same period the previous year.
Much, much more HERE.
Source: Property Report Asia

China real estate sales show

The first half of 2008 saw a slowdown in the growth rate of loans to real estate developers and buyers.

The People’s Bank of China (PBOC) reports Chinese bankers held loans totaling RMB5.2 trillion (about $580 billion) to real estate developers and housing buyers by the end of June, up 22.5% year-on-year.

The central bank said the growth rate was two percentage points lower than the same period last year, representing a decline for seven consecutive months since last December.

China’s real estate investment grew fast in the first half, but the housing price decline in some cities has strengthened a wait-and-see attitude among housing buyers, which has held back housing sales.  The country’s real estate developers sold out about 260 million square meters of houses in the first six months, and the sales value totaled RMB1 trillion, representing a decrease of 7.2% and 3.0% over the same period last year, respectively.

The PBOC had been warning banks to control their exposure to real estate.  Obviously the banks are responding.
Source: China Stakes.com

The headline comes from the International Herald Tribune which is not normally given to gloomy stories.

It reports that although official figures show investment in property rose 32% in the first four months from a year earlier, developers are worried as bank loans dry up and the cost of tapping other sources of funds rises.

Falling home sales are a particular threat to developers, who typically rely heavily on cash from the sale of unfinished projects to pay for operations and expand.

According to the China Index Academy, which is affiliated with SouFun.com, a leading real estate Web site, the number of residential transactions in Beijing fell 13.7% in April from March and was down 56.4% from a year earlier.

Not a happy scene.

Zhang Xinming, chairman of Walter Asia, a developer based in Jiangxi Province, said maximizing cash flow was now his main strategy.

Walter Asia has accelerated the development of land that it had bought cheaply, hoping to cash in quickly.

It is also shifting its focus from high-end housing preferred by investors to more affordable apartments that are still in demand by regular home buyers. Which is what the government wanted to happen.

Zhang Xinming said, ‘The ability of Chinese developers to get through the harsh winter is growing.’
Source: International Herald Tribune

China’s banking regulator has just released a new circular, requiring banks to strengthen their management on commercial real estate credit. This comes with a rise in the number of house buyers who can’t afford their mortgages.

All of this, in a sense, in response to the American sub-prime disaster where greedy bankers loaned money to people who would, in other countries, not even get a credit card.

The China Banking Regulatory Commission sent an inspection team to Shanghai a month ago.

The team discovered some real estate companies had forged documents to help non-credit worthy customers get mortgage loans.

This is going to get those real estate companies into serious trouble unless they have amazing luck and connections.

The CBRC is calling on all banks to step up risk control, and carefully revalue the credit of both the real estate developers and home buyers to avoid further defaults. All of which means it will be harder to borrow money to buy a property and, as a result, property prices may stall or even, wonder of wonders, decline.
Source: CCTV.com