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International Realty News & Trends

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  • Re : International Realty News & Trends

    Chinese buyers snap up luxury homes as 'hard currency' in soft property market

    BEIJING (Reuters) - In the southern Chinese city of Shenzhen, where the real estate sector has slowed, luxury property is bucking the downtrend, the official Securities Times reported on Monday, as wealthy buyers seek a safe haven amid a weak market.

    In the southern tech hub, a total of 604 units in a luxury development that has not yet been built have been presold for up to 162,000 yuan ($23,087) per square metre, it said.

    With the units ranging in size to up to 425 square meters, that suggests some could have reached values of $9.8 million.

    In May, units at a project going for at least 18 million yuan each were sold out on the first day they were launched, the newspaper said.

    China's property market has slowed sharply in recent months, with prices and sales both falling after authorities stepped in to cut excessive debt held by property developers, triggering a liquidity crunch and hitting buyer sentiment.

    But new luxury homes are still popular with buyers, who see them as "hard currency" in a feeble property market, the newspaper cited industry insiders as saying.

    Demand has remained bleak despite a slew of stimulus measures imposed by over 200 cities to stoke buyers' interest, with property sales by floor area falling 48% on year in August.

    In contrast, in the first half of this year, the average selling price of luxury properties valued at 10 million yuan and above rose 11% from a year earlier, according to China Real Estate Information Corp (CRIC), an independent property consultancy service.








    Chinese buyers snap up luxury homes as 'hard currency' in soft property market (msn.com)


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    • Re : International Realty News & Trends

      China's mortgage boycott quietly regroups as construction idles

      Read more at:
      https://realty.economictimes.indiati...idles/94332966



      The mortgage protest became a rare act of public disobedience in China, pushed via social media in late June and forcing regulators to scramble to offer homebuyers loan payment holidays for up to six months and pledges to expedite construction.


      BEIJING: Two months since many Chinese homebuyers stopped repaying mortgages to protest stalled construction on their properties, a lack of progress at more sites now threatens to intensify the boycott, despite assurances from authorities.

      The mortgage protest became a rare act of public disobedience in China, pushed via social media in late June and forcing regulators to scramble to offer homebuyers loan payment holidays for up to six months and pledges to expedite construction.

      But with no sign of construction picking up at many projects and no clear guidance from local authorities, more homebuyers have told Reuters they plan to join others who have stopped paying mortgages.

      Wang Wending in the central city of Zhengzhou said he was allowed to delay mortgage payments on his apartment for six months in late July.

      However, he would have to pay the due instalments in one go when the moratorium ends, regardless of the state of construction, which was yet to commence.

      "What will we do if construction still doesn't resume after six months? We'll directly stop all payments," he said.

      Homebuyers in at least 100 cities have threatened to halt mortgage payments since late June as developers stopped building projects due to tight funding and strict COVID-19 curbs.

      The threat of more mortgage boycott comes as China prepares to hold the Communist Party Congress next month, with efforts to revive an economy plagued by the property crisis in focus.

      While censorship on social media has blocked messages and wiped videos of the protests, largely taking them out of public spotlight, the boycott has nonetheless expanded.

      A widely monitored list on the GitHub open source site entitled "We Need Home" showed the number of projects across China whose buyers have joined the boycott at 342 on Sept. 16, up from 319 in late July.

      "The government is focusing on social stability and has not thought about solving the problem of unfinished projects," Qi Yu, a homebuyer in the southeastern city of Nanchang, said. "There's nothing we can do if the government doesn't help us."

      Qi has not serviced his 1 million yuan mortgage since July.

      Zhengzhou and Nanchang governments did not respond to faxed requests for comment.

      Authorities in Zhengzhou, the epicentre of the protest, have vowed to start building all stalled housing projects by Oct. 6, people with knowledge of the matter told Reuters.

      The city will use special loans and urge developers to return misappropriated funds and property firms to file for bankruptcy, the sources said.

      'Appease homeowners'

      The mortgage boycott has added to worries about a prolonged slump in China's property market, which has lurched from crisis to crisis since mid-2020 after regulators stepped in to reduce leverage.

      Beijing has unveiled measures including lowering borrowing costs and assisting local governments to set up bailout funds to prop up the property market.

      Although that's assured some homebuyers, others say they have been forced to stay silent amid a crackdown on dissent.

      In Zhengzhou, 30-year-old Ashley, who only gave her first name, said while construction resumed at her apartment in the second quarter, only a handful of people work at the site to, what she believes, "appease homeowners".

      Ashley told Reuters she and other homeowners of the development were warned against travelling to Beijing to protest after the Zhengzhou government repeatedly cancelled meetings with homebuyers.

      "I received a call from the police this week, they asked me not to get around them to protest to higher authorities," she said. "They said if anything I should talk to local government first, and if they cannot solve the issue they can forward the message for us."

      Ashley showed Reuters a phone log that police had called her 15 times in one day earlier this month. Zhengzhou Public Security Ministry declined to comment.

      Bailout

      About 2.3 trillion yuan ($43.02 billion) worth of loans is at stake if all unfinished projects ended up in mortgage boycotts, representing 6% of total mortgages, Natixis said in a report last month.

      Beijing has set up a bailout fund worth up to $44 billion and $29 billion in special loans for unfinished projects to restore confidence, sources say.

      Sources at property developers and banks, however, said it could take time for those funds to make a difference.

      "There won't be money for everyone," said a senior executive at a Shanghai-based developer.

      A homebuyer in China Evergrande Group's project in Hefei said he was due to receive his apartment in 2020, but construction has stalled for the last four years.

      Buyers in that project started protesting last year and joined the wider boycott in June, said the homebuyer, who declined to be named.

      Evergrande said company chairman Hui Ka Yan vowed in an internal meeting last week to return all construction to normal by the end of September.

      Out of Evergrande's 706 projects, 38 have not resumed construction, while 62 were only now restarting.

      "We will not repay mortgages again if we don't see any material results," the person said, adding partial construction resumed in late August with only around 20 workers.

      "We'll continue to protest - we'll go to Beijing."
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      • Re : International Realty News & Trends

        Kaisa Group offshore creditors offer $2 billion to take over stalled projects: Sources

        Read more at:
        https://realty.economictimes.indiati...urces/94330225



        Kaisa Group, the second-largest U.S. dollar bond issuer among Chinese developers after China Evergrande Group, is in the process of restructuring its $12 billion offshore debt after defaulting on some bonds last year.


        HONG KONG: An offshore bondholders' group of cash-strapped Kaisa is offering up to $2 billion to acquire stalled housing projects of the Shenzhen-based developer to facilitate their completion, two people with direct knowledge of the matter said.

        The takeover talks are in early stages, according to the people, who declined to be named as they were not authorised to speak to the media on this subject.

        If successful, it would be the first foreign investor takeover of Chinese developers' distressed residential assets in the latest wave of crises to hit the property sector over the past year. It also comes as authorities are scrambling to contain a mortgage boycott by homebuyers against stalled projects.

        Kaisa Group, the second-largest U.S. dollar bond issuer among Chinese developers after China Evergrande Group, is in the process of restructuring its $12 billion offshore debt after defaulting on some bonds last year.

        It is also struggling to repay its debt onshore and tap capital to complete its projects.

        The offshore bondholder group, which is being represented by financial advisory group Lazard Ltd, made the offer to acquire Kaisa's stalled projects to the developer's advisor CITIC Securities, said the people.

        The offshore bondholder group aims to offer up to $2 billion to buy some non-performing loans from Kaisa's lenders, tied to unfinished housing projects, at a 20%-25% discount and provide the financing needed to complete the projects, they added.

        The terms offered by the offshore creditors' group are similar to those previously extended by Chinese asset managers when buying the distressed assets of some developers in the country, the people said.

        Kaisa declined to comment. Lazard and CITIC did not respond to request for comment.

        As most of Kaisa's projects are in top-tier Chinese cities, where housing prices are relatively resilient, bondholders expect to reap the profits after the completion of the stalled projects, said the two people.

        They have also offered to split profits with Kaisa after certain returns, while the extra liquidity recouped could help the developer's business and operations, which would also be beneficial for its debt restructuring, they added.

        Financing options

        Evergrande and Kaisa have been at the centre of a stifling cash squeeze in the Chinese property sector, which accounts for a quarter of the economy and which has lurched from one crisis to another in the past year, roiling global and local markets.

        A string of developers, including Evergrande and Kaisa, have defaulted on billions of dollars worth of dollar bond obligations since the second half of last year, forcing bondholders to enter into long and cumbersome debt restructuring processes.

        It is unclear how many stalled projects would be covered by the bondholder group's offer, and how many of them meet the purchase criteria laid out by the group.

        The group proposed that, among other criteria, the projects must be located in first or second tier cities, have no off-balance sheet loans and own permit to pre-sale.

        With a view to help revive onshore projects and advance the offshore restructuring talks, the bondholders' group has also offered to take a 20% haircut on Kaisa's dollar notes and inject equity capital, said the two people and two other sources.

        Under the proposal, Kaisa would raise $550-$700 million by issuing new shares, the two people with direct knowledge of the matter said. While that would dilute Kaisa Chairman Kwok Ying Shing's stake in the company, there would be a provision for him to raise his shareholding again, they added.

        To revitalise its projects and improve short-term liquidity, Kaisa said in April it had entered into strategic co-operation agreements with state-owned China Merchants Shekou Industrial Zone Holdings and China Great Wall Asset Management.

        A person close to Kaisa had said at the time the agreements with state-owned companies were expected to help restore homebuyer and regulatory confidence in the embattled developer.
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        • Re : International Realty News & Trends

          In small Chinese cities, unsold housing stock hits highest since 2019

          Read more at:
          https://realty.economictimes.indiati...-2019/94355418



          The number of unsold new homes in tier-three and tier-four cities jumped 5% as of the end of August from a year ago, according to China Real Estate Information Corp (CRIC) which monitors 100 Chinese cities.


          BEIJING: The stock of new homes in small Chinese cities hit its highest since 2019 as of the end of August, according to a report from an independent consultancy, amid fragile demand in the country's downtrodden property market.

          The number of unsold new homes in tier-three and tier-four cities jumped 5% as of the end of August from a year ago, according to China Real Estate Information Corp (CRIC) which monitors 100 Chinese cities.

          It was currently taking developers about 20 months to sell a new home nationwide and over 50 months in some small cities, CRIC said in a report published on Wednesday.

          Small cities generally account for about half of all unsold new homes in China. CRIC declined to comment when asked by Reuters to give more details.

          China's property market has repeatedly grappled with crises since 2020 and problems worsened in August as a mortgage boycott and developers' financial strains further hurt confidence in the sector, data showed earlier this month.

          Prices were dragged down by weak demand in smaller cities amid persistently slow deliveries by heavily-indebted developers, the data showed.

          Developers in tier-two cities including some provincial capitals, were also struggling to find buyers, the CRIC report showed, and it was taking them around 18 months to sell houses.

          The eastern city of Qingdao and the central city of Wuhan both reported more than 20 million square meters of unsold new home stock each, topping the cities monitored by CRIC.

          While the number of unsold new homes increased by 13% year on-year in August in tier-one cities, where developers tend to launch new projects, it took nearly 13 months for new homes to be sold in cities such as Beijing, Shanghai, Guangzhou and Shenzhen, said CRIC.

          Nationwide, housing stock rose 3% to 587.2 million square metres, according to CRIC. That's the equivalent of about 6.5 million typical Chinese homes measuring 90 square metres each.

          Housing stock has been rising at least since mid-2020 when policymakers started to step in to cut excessive debt held by developers.

          As of August, there were 6.1 billion square metres of housing projects under construction, according to data from China's statistics bureau.

          The market will continue to find its bottom, with home sales likely to fall in the traditional peak buying season of September, said the CRIC.

          "Overall inventories are likely to maintain a rising trend," it said.
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          • Re : International Realty News & Trends

            Britain cuts stamp duty tax on property purchases

            Reuters



            New British Chancellor of the Exchequer Kwasi Kwarteng walks outside Number 10 Downing Street, in London, Britain September 6, 2022. REUTERS/Toby Melville

            LONDON, Sept 23 (Reuters) - Stamp duty, a tax on house purchases, will be cut to help families to afford to buy homes, British finance minister Kwasi Kwarteng said, with threshold at which it is first paid doubling to 250,000 pounds ($280,000) for home movers.

            The nil-band threshold for first-time buyers will also increase to 425,000 from 300,000 pounds, he told lawmakers on Friday, adding that the changes are permanent and effective immediately.

            "The steps we've taken today mean 200,000 more people will be taken out of paying stamp duty altogether," he said in a tax-cutting mini-budget designed to spur economic growth.

            Stamp duty, payable in England and Northern Ireland, is a graduated tax, which rises in steps to 12% on the portion of the property price above 1.5 million pounds.

            There was a stamp duty holiday during the COVID-19 pandemic, which initially increased the nil band to 500,000 pounds, stimulating a market which rose to record levels.

            Shares in builders rose after the cuts were announced, with the UK's housebuilders' index up around 2%.

            The likely announcement of reductions in the tax had been reported in the media, prompting broker Investec to say on Wednesday that cuts would support the housing market, but rising interest rates, the cost-of-living crisis and fears of higher unemployment would remain dominant.












            Britain cuts stamp duty tax on property purchases | Reuters
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            • Re : International Realty News & Trends

              In China, home buyers occupy their 'rotting', unfinished properties

              Read more at:
              https://realty.economictimes.indiati...rties/94445037



              Shanghai E-House Real Estate Research Institute estimated in July that stalled projects accounted for 3.85% of China's housing market in the first half of 2022, equivalent to an area of 231 million square metres.


              GUILIN: For six months, home for Ms. Xu has been a room in a high-rise apartment in the southern Chinese city of Guilin that she bought three years ago, attracted by brochures touting its riverfront views and the city's clean air.

              Her living conditions, however, are far from those promised: unpainted walls, holes where electric sockets should be and no gas or running water. Every day she climbs up and down several flights of stairs carrying heavy water bottles filled with a hose outside.

              "All the family's savings were invested in this house," Xu, 55, told Reuters from the Xiulan County Mansion complex, her room bare except for a mosquito net-covered bed, a few necessities and empty bottles on the floor. She declined to give her full name, citing the sensitivity of the matter.

              Xu and about 20 other buyers living in Xiulan County Mansion share a makeshift outdoor toilet and gather during the day at a table and benches in the central courtyard area.

              They are part of a movement of home buyers around China who have moved into what they call "rotting" apartments, either to pressure developers and authorities to complete them or out of financial necessity, as numerous cash-strapped builders halt construction amid the country's deep real estate slump.

              Shanghai E-House Real Estate Research Institute estimated in July that stalled projects accounted for 3.85% of China's housing market in the first half of 2022, equivalent to an area of 231 million square metres.

              While some local governments have taken steps to prop up the property market by setting up bailout funds, buyers like Xu, who paid deposits in advance and are on the hook for mortgages, remain in limbo.

              Mortgage strikes

              The proliferation of unfinished apartments has sparked unprecedented collective disobedience, fuelled by social media: in late June, thousands of home buyers in at least 100 cities threatened to halt mortgage payments to protest stalled construction.

              The overall property market is highly sensitive to cases of unfinished apartments because 90% of new houses bought in China are purchased "off plans" while still under construction, said Yan Yuejin, research director at Shanghai E-House.

              "If this issue is not resolved, it will affect property transactions, the government's credibility, and it could exacerbate the developers' debt problems," he said.

              China's deep property slump, along with disruptions caused by strict anti-COVID measures, are dragging on the world's second largest economy just as the ruling Communist Party gears up for its once-in-five-years Congress next month.

              'Crashing from paradise'

              Xu bought her two-bedroom, 70 square metre flat in early 2019, about a year after its developer, Jiadengbao Real Estate, started construction and began marketing apartments for around 6,000 yuan ($851) per square metre, which they said would come with facilities such as floor heating and a shared swimming pool.

              Work progressed quickly at first, with blocks in the planned 34 tower complex going up one after another.

              But in June 2020, Jiadengbao Real Estate hit the headlines after a court accused its parent company of illegal fund-raising and seized 340 million yuan worth of its properties, including a number of flats in Xiulan County Mansion.

              Construction stopped in mid-2020, which Xu found out months later, describing her feelings at the time as "crashing from paradise".

              Jiadengbao Real Estate did not respond to a request for comment from Reuters.

              Since the debt crisis erupted in 2021, thousands more home buyers have been caught in similar predicaments as cash-strapped developers went into bankruptcy or abandoned struggling projects.

              Fencing and undergrowth

              On a recent day, the main block of buildings at Xiulan County Mansion was surrounded by a tall blue fence while the clubhouse, touted in promotional materials, was covered in a dense undergrowth. Cement mixers, iron poles, and piles of debris lay strewn around.

              Xu, who is unemployed, said she bought the apartment for her only son, with the hope that he would be able to raise a family there. She said her son and her husband, who live far away in the northern province of Hebei, blame her for their financial predicament, and no longer speak to her.

              "We don't know how long we will have to live here because the government has not said anything officially," she said.

              She hopes the Guilin government will step in to help.

              The city government did not respond to a request for comment from Reuters.

              Housing authorities in Baoding, the northern city where Xu is from and where Jiadengbao Real Estate's parent company is registered, said last November the city government and Communist Party committee had set up a group to resolve the issue.

              "If the government really wants to protect people's livelihoods, and resume construction, we will go back home," Xu said.
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