Harbin in China Announces Measures to Support Builders, Real Estate News, ET RealEstate

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BEIJING: Harbin has become one of the first cities in China to announce measures to support real estate developers and their projects, which have been rocked by the worsening debt crisis of real estate giant China Evergrande Group.

Developers are expected to recover some of their pre-sale funds held in government escrow accounts as quickly as possible to relieve the pressure on their cash flow, the government in Harbin, capital of Heilongjiang Province, said on Sunday. northeast of the country.

Developers with good credit profiles are encouraged to resume presale activities as soon as they can, the statement said.

China’s real estate investment and overall sales have declined as new home price growth slows. In many inland cities, low demand has led many developers to hit the pause button on sales or offer discounts.

Yan Yuejin, director of Shanghai-based E-house China Research and Development Institution, said he expected other cities to follow Harbin in announcing their support for the sector, especially “those under heavy pressure. pressure from high stocks, including some cities of level three and four. in the central and western regions. “

In another positive sign for developers, Morgan Stanley raised its view of the Chinese real estate sector as being “attractive” compared to “online,” saying regulators could loosen their grip on the sector to help it out. stabilize and support the economy.

China’s real estate sector – which accounts for about a quarter of the country’s gross domestic product – has been hit by a tightening of borrowing ceilings that has hurt cash flow as well as the ability of developers to complete construction and raise funds. funds for new projects.

The crisis in Evergrande, which is grappling with some $ 300 billion in debt and missed two coupon payments, has only added to these tensions, with investors fearing that other developers are also likely to do so. fault.

Morgan Stanley analysts, however, said systemic risks have become more manageable, as regulators and local governments have the experience and mechanisms in place to deal with developer flaws.

“Debt restructuring will also be done at the holding level, while operating companies or real estate projects will remain in operation during the restructuring with the support of regulars and local communities,” they said Sunday in a statement. note to customers.

Harbin’s additional measures will include grants of up to 100,000 yuan ($ 15,500) for talented residents with skills and qualifications looking to buy a home for the first time.

“If policymakers were to make statements to ensure completion of real estate projects and support restructuring, it could alleviate the concerns of homebuyers and the financial system,” Morgan Stanley said.

Kenneth Ho, head of Asia credit strategy at Goldman Sachs, also said he believed Chinese policymakers would have zero tolerance for systemic risk and that political support would be provided if there was further deterioration. levels of real estate activity.

China’s real estate and banking sub-indices gained more than 2.2% each on Monday against a larger, flatter market.

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