BEIJING (Reuters) – China may introduce property trusts this year, giving developers a much needed new source of funding, according to a top industry association official who believes Beijing is easing its tough stance as the property market cools.
The move could come as part of a government change of tack to ease tight monetary policies, many of which have been aimed at the property industry, according to Nie Meisheng, president of the China Real Estate Chamber of Commerce.
Beijing intensified a campaign late last year to clamp down on bank loans to the property sector, asking for higher down payments from homebuyers, as part of a wider effort to curb inflation and rein in runaway growth.
The steps hit home sales — down 50 percent in Beijing, Shanghai and Shenzhen in July from a year earlier — and prices in some areas of Guangdong province have fallen 25 percent.
Nie said the measures were aimed at cutting the industry’s dependence on bank loans, which account for half of developers’ funding, but added that Beijing was keen to ensure the property market did not collapse and hurt the broader economy.”When one door closes, others will open,” she said.
China has given the green light to big developers, such as China Vanke, Poly Real Estate and China Merchant to issue corporate bonds or new shares to replace loans coming due and to fund further expansion this year.
Setting up real estate investment trusts (REITs) – securities that pay rent from their property as dividends – will provide developers with a new avenue for funding, allowing them to effectively sell finished commercial buildings to investors.
Source: Reuters, 02.09.2008 for full article click here
Filed under: News, Asia, China 中国, Derivatives, Property, REIT, SZSE Shenzhen Stock Exchange
