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InvestmentsAnalysis-China's property woes put prestige global projects in play By Reuters

Analysis-China’s property woes put prestige global projects in play By Reuters

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© Reuters. FILE PHOTO: The brand of developer R&F Properties is seen close to the One Thames City development website at Nine Elms, in London, Britain, October 6, 2021. REUTERS/John Sibley/File Photo

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By Marc Jones and Tommy Wilkes

LONDON (Reuters) – China’s property sector woes may spell hassle for prestige mega-projects in London, New York, Sydney and different high cities because the builders behind them scramble for money.

While China Evergrande Group’s struggles have dominated the disaster, the danger to multi-trillion greenback global property markets stems from a few of its rivals which have spent the final decade competing to construct ever taller and grander skyscrapers.

Shanghai-based Greenland Holdings, which breaches as a lot of China’s debt “red lines” as Evergrande, has simply constructed Sydney’s https://www.greenlandaustralia.com.au/en/greenland-centre tallest residential tower, has plans to do the identical in London https://spirelondon.com and has billions of {dollars} price of projects in Brooklyn, Los Angeles, Paris and Toronto.

The developer says it stays dedicated to its flagship builds together with its long-delayed, 235 metre-high Spire (NYSE:) London tower, nevertheless it put a part of one other main London website available on the market earlier in the yr and different companies are hoisting on the market indicators too.

Evergrande and Kaisa Group, which was the primary Chinese property agency to default again in 2015, are each making an attempt to promote Hong Kong buildings to drum up desperately-needed money., whereas Oceanwide Holdings has simply had what was alleged to be San Francisco’s tallest tower seized by disgruntled collectors.

“I suspect, as with anything, if you’re running into liquidity issues you start to look to sell your investment properties,” mentioned Omotunde Lawal, head of emerging-markets company debt at asset supervisor Barings, which holds some Chinese property companies’ bonds.

As many Chinese companies overpaid for prime abroad websites in the scramble to safe them, the query is who will purchase them, Lawal added. “Probably they are unlikely to get cost, so I think it depends on just how desperate they get.”

SIZABLE ASSET SALES

Guangzhou R&F Properties is one other main agency in focus after it required an emergency money injection this month. It has two big unfinished developments in London, together with one with a dozen skyscrapers subsequent to the Thames https://www.thamescity.com, in addition to quite a few builds in Australia, Canada and the United States.

An R&F spokesperson in London mentioned it remained “fully committed” to all its British projects.

But with almost $8 billion of debt to repay in the subsequent 12 months, solely $2 billion of freely accessible money and gross sales down almost 30% year-on-year final month, main credit standing businesses say it might want to money in some chips.

“R&F’s capacity to handle its near-term debt maturities will hinge on the execution of sizable asset sales,” S&P mentioned, predicting that buildings, inns and varied stakes in projects may all be offered. Fitch in the meantime estimates R&F has 836 billion yuan ($130 billion) of belongings that might doubtlessly be offered.

R&F, Greenland, Evergrande and Kaisa have all declined to remark additional on their funds. Oceanwide mentioned final week it was “actively discussing” the state of affairs with its San Francisco challenge with the collectors concerned.

SPENDING SPREE

Chinese builders went on a serious worldwide spending spree between 2013 and 2018, however the splurge has slowed abruptly since as Beijing has moved to curb companies’ extreme money owed.

After pouring greater than 28 billion kilos into London projects in 2018, they’ve spent 1.5 billion kilos in the primary half of 2021, the bottom quantity since 2012, information from Real Capital Analytics reveals.

Figures from property brokers Knight Frank paint an identical image in Australia, New York and different high north American cities, the place Greenland, R&F and others large companies together with Country Garden, Poly Property and China Vanke additionally spent tens of billions of {dollars} a yr.

Stephanie Hyde, UK chief government of actual property agency Jones Lang LaSalle, which markets for R&F in London and one other agency known as Xinyuan which has simply narrowly prevented default, advised Reuters she wasn’t conscious of any Chinese companies seeking to sell-up because of strains again in China.

If they did resolve to promote although, they had been more likely to discover consumers comparatively rapidly she added, as a result of flood of worldwide funding cash present circling global property markets like London the place costs at the moment are at a report excessive.

Chris Gore, a central London principal at actual property agency Avison Young, mentioned he wasn’t conscious of any sudden promoting plans both, however that the strain would develop on Chinese companies if the disaster at house continued.

“If they needed to sell and could sell for a profit, then I think they would just sell,” Gore mentioned. “There wouldn’t be a problem if a few wanted to sell, but if they all suddenly wanted to exit at the same time, they couldn’t.”

($1 = 0.7263 kilos)

($1 = 6.4050 renminbi)

Chinese property shares come crashing down https://tmsnrt.rs/3Cwknfh

Monthly Land Sales in Mainland China (billions of yuan) https://tmsnrt.rs/3uGApQv

China’s most indebted property firms https://tmsnrt.rs/3u2Onfv

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