This is the latest example of supporting support for the real estate sector.
Just recently, more and more cash-strapped property developers have been placed on a local "white list" of eligible for financing support, indicating that banks' willingness to inject liquidity into the property sector is rapidly expanding.
However, it remains unclear whether commercial banks will be willing to lend to property developers who need new funding.
After Country Garden announced that more than 30 of its projects had been approved for the "white list", Sunac, Greenland, CIFI Group and China SCE Group also announced that some of their projects were included in the local "white list" that are eligible for bank loans.
Under the real estate "project whitelist" mechanism, which was launched on January 26, 35 cities proposed residential real estate projects that need financing support to banks, and coordinated with financial institutions to meet the funding needs of these projects.
Behind the financing support of the white list are increasingly unsustainable real estate developers.
They are waiting to be fed, but due to the wait-and-see sentiment of home buyers, it is becoming more and more difficult to withdraw funds, and now, it may be the time to desperately hope for financial support.
Country Garden, China's largest private developer, had defaulted on $11 billion worth of offshore bonds late last year, and Country Garden said on Saturday that after entering the "white list", the company's related projects will receive financing support, which will help ease financial pressure, promote guaranteed delivery, revitalize assets, and improve the sustainable operation of projects.
And this is also the main force of the real estate whitelist.
Sunac, which completed a $9 billion offshore debt restructuring plan last year, also said in a statement on Feb. 5 that more than 90 of its projects had been included in the first "white list" of some major cities.
In the statement, Sunac said that with the financing in place, the cash flow pressure on the development and operation of Sunac's multiple projects will be eased, and the delivery in different cities will be further ensured.
Behind the "white list", in fact, the guarantee is to ensure the delivery of the building.
Why is it becoming more and more important in recent years?
That's because the current business model of real estate developers itself relies on strong real estate sales in the past, as real estate enters a downward cycle in 2022, there are fewer and fewer buyers, and it is difficult for real estate developers to withdraw funds, and cash flow pressure is constantly being tested.
This further triggered last year's supply interruption wave, and a large-scale supply interruption tide will cause financial risks to banks, so the financing support of the white list is to solve the financial pressure of real estate developers and assist developers to complete the work of ensuring the delivery of buildings.
But are banks willing to give "blood transfusions" to property developers?
It's a risky decision.
In essence, from the existing trend of the domestic real estate industry, the slowdown or even downward trend of real estate has become an indisputable fact, based on this, banks are currently lending to developers, financing support, just to help real estate developers to ensure the delivery of the work.
And with buyers already paying, it's hard to say that the move will alleviate the long-term financial pressures faced by property developers.
If this premise does not change, if it cannot inspire the confidence of buyers and encourage more people to buy houses, then in the long run, the financial pressure faced by real estate developers is still difficult to be completely solved.
So we see that after the real estate whitelist news appeared, the reaction to this was relatively cold.
Country Garden, which is listed on the Hong Kong stock market, was flat on Monday, while CIFI rose only 09%, Sunac and China SCE are **09% and 065%, while Greenland's share price is up 59%。
* The changes are immediate, so it is easier for us to see the market's attitude to this news.
Sunac and CIFI are both private real estate companies, ranking among the top 20 real estate developers with the highest sales in China, while China SCE's $1.9 billion bond arrears in October last year, and more than a dozen projects that China SCE needs to raise 3 billion yuan have been included in the "white list", and strive to get another 20 projects approved, if successful, will raise an additional 10 billion.
Behind this, the main force of risk-taking is the bank.
For financing support for real estate projects, developers and investors have said that any new similar loans can only be used to ensure the completion of designated real estate projects, and cannot be used to repay debts or help regain financing.
This may be the root cause of the lukewarm response.
As I said earlier, the support of financing projects is all about the delivery of the property, and it is a prerequisite for the buyer to have purchased the property, so no matter how much financing the real estate developer obtains, it will not essentially improve the cash flow capacity of these developers.
But for the whole industry, it is still good news, and in addition, the delivery of the building can also allow those families who have paid not to buy unfinished buildings, but also to have a house to live in.
From a macro point of view, it is easy to find that the support measures for the real estate industry were conservative at the beginning, staying more on restrictions such as buying qualifications, such as canceling purchase restrictions and sales restrictions, and even canceling social security requirements, etc., but these measures have limited actual market stimulation.
In the end, it will only come up with stronger and more practical supporting financing support in 2024.
Under the principle of diminishing marginal benefits of general stimulus measures, we are also seeing that support for the real estate sector is increasing, all aimed at saving real estate developers with cash flow problems.
In 2023, the national real estate development investment will be 9 percent lower than in 20226%, and the area of new housing starts decreased by 204%, and residential sales also shrank 6%.
These data confirm the fact that the real estate industry is on a downward trend.
The debt pressure faced by property developers is eroding the confidence of home buyers and has a big impact on local incomes.
Because of this, when the debt pressure of real estate developers themselves remains high, will the financing at this time bury deeper hidden dangers in the future?
However, in the face of the work of guaranteeing the delivery of the building, it has to provide financial support for real estate developers, which is to prevent any black swan from evolving into a larger event.
Judging from the white list, real estate developers have received financial support to promote the work of guaranteeing the delivery of buildings, which has allowed those who have already paid to buy houses to live in new houses, real estate developers have maintained their reputation, and the market has gained more confidence, which can be said to kill three birds with one stone.
But it still seems difficult to alleviate the fundamental problem faced by developers: where does the money come from?
The financing obtained from the white list can only be used to promote the delivery of buildings, not to repay debts, so if the market confidence is not completely restored, if new home sales are still weak, then the debts faced by real estate developers may eventually have to go to the road of selling assets to pay off debts.
This seems to be a kind of helplessness, but it is a good reflection of the basic logic of the market economy, that is, any aggressive and aggressive business model, the market will eventually give punishment.
If any enterprise does not even pay attention to the basic market logic and laws, it will eventually be suppressed by the market.
In today's domestic housing supply is becoming more and more saturated, real estate developers are still taking land to build buildings, which itself also illustrates the fact that if the market is not respected, if it does not conform to market changes, then the final price must be paid by the enterprises themselves.
The whitelist is not saving real estate developers who are waiting to be fed, but only families who have paid but have not received a house, and that's it.
There is no absolute "too big to fail" in any industry, and the same is true for property developers.
end.Author: Luo sir, the workplace reference of the new youth. Concerned about the logic behind the development of things, optimistic pessimists. Follow me and grind the knowledge to you.
List of high-quality authors