Two of China’s richest female real estate tycoons—billionaires Wu Yajun and Yang Huiyan—saw their net worth gain a combined $3.6 billion in just a few hours, after the country’s regulators took a surprising turn and unveiled a comprehensive package of measures aimed at supporting the ailing property industry.
To ensure the “stable and healthy development” of the real estate market, authorities including the country’s central bank, the People’s Bank of China, as well as the China Banking and Insurance Regulatory Commission (CBIRC), issued on Friday a 16-point document that included steps to boost lending and liquidity, according to multiple media reports.
Screenshots of the document are also available online, showing that regulators encouraged banks to meet the “reasonable” financing needs of developers with sound corporate governance, allow extension of debt repayments by up to one year, and treat private and state-owned real estate companies on an equal footing.
“We view this as the most crucial pivot since Beijing significantly tightened financing of the property sector,” Nomura economists led by Lu Ting wrote in a research note on Monday. “Thus, those cash-strapped developers (especially private ones), construction companies, mortgage borrowers and other related stakeholders can now breathe a sigh of relief.”
Shares of several major real estate companies soared in response, with billionaire Yang Huiyan’s Hong Kong-listed Country Garden jumping 40.6% as of Monday noon, and fellow billionaire Wu Yajun’s Longfor Group, also listed in Hong Kong, surging 22.8%. Yang’s subsequent $2.4 billion increase in wealth and Wu’s $1.2 billion placed the two moguls among the five biggest gainers on the Forbes Real-Time Billionaires List for the same day.
To be sure, Yang’s Country Garden and Wu’s Longfor Group have also been battered by China’s crackdown on once skyrocketing housing prices and aggressive corporate borrowing, although the firms are considered to be of stronger financial health than defaulted developers such as Shimao Group, Sunac China Holdings and China Evergrande Group.
Country Garden, for example, saw its net profit plunge 96% to $612 million in the first half of this year. China’s property sales have declined for a 14th consecutive month in September, as homebuyer confidence slump amid the unrelenting crackdown.
Shen Meng, managing director at Beijing-based boutique investment bank Chanson & Co., cautions that the 16-point plan by no means amounts to a sector-wide bailout. “The policies are aimed at preventing mass-scale defaults and systematic financial risks when many developers face maturing debt payments next year,” he says. “Another focus of these policies is ensuring the delivery of pre-sold but stalled construction projects.”
China’s developers collectively have at least a combined $55 billion in bonds due over the next two years, but face weaker sales and limited refinancing options, Moody’s Investors Service wrote in an October 27 research note. Companies running out of money have suspended construction of pre-sold housing projects, causing rare public protests and mortgage boycotts across the country.
But as authorities refrain from bailing out more firms, beleaguered real estate companies, such as Evergrande, are unlikely to have a reversal of fortunes, according to Shen. The company’s troubled billionaire founder Hui Ka Yan has come to symbolize tycoons who have borrowed across the board to fund their expansion. Hui, once Asia’s richest person, now only has a net worth of $2.9 billion, down from a peak of $42.5 billion in 2017, as the company struggles to restructure its north of $300 billion in total liabilities.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
