(Bloomberg) — When a bellwether Chinese property developer reportedly sought buyers for $12 billion of assets to repay debt this year, the move sparked hopes of a liquidity boost for the nation’s embattled real estate firms.
But since January, only about three of 34 assets listed by Shimao Group Holdings Ltd. — one of the biggest issuers of dollar bonds in the sector — have been sold, according to exchange filings.
While some of the luxury builder’s prime assets drew interest, buyers have become more cautious about acquisitions in response to the deepening liquidity crisis, according to a person familiar with the discussions. That, along with the broader property slowdown, has led to a price gap that’s often impossible to bridge, this person and another person familiar with the market said. Both declined to be identified discussing private information.
The slow progress underscores a wider trend that signals more bad news for creditors seeking to recover the billions they’re owed. Since an initial flurry of deals in January, cautious buyers and reluctant sellers are struggling to agree to terms, undermining China’s attempt to engineer a soft landing after years of debt-fueled expansion.
Mergers and acquisitions by listed Chinese developers in the first quarter slumped to the lowest since the pandemic began, data compiled by Bloomberg show. The figures don’t capture transactions smaller than $50 million or those not publicly announced. Meanwhile, defaults have climbed to a record and the slowdown in housing sales continued in April, adding to liquidity woes.
“I haven’t seen any developer successfully lifting itself out of distress through M&A,” Shen Chen, a partner at Shanghai Maoliang Investment Management LLP, who trades high-yield bonds. “Buyers are slashing prices hard. Both sides refuse to budge.”
Chinese regulators see asset sales as a key step to easing the liquidity crisis, and deal financing is one of the few concrete measures of support from Beijing as President Xi Jinping’s government largely steers clear of direct bail-outs.
The People’s Bank of China recently held a meeting with about 20 major banks and asset-management firms seeking looser requirements on a range of financing, including lending for property acquisitions, people familiar with the matter said last month. Regulators in December eased limits on borrowing by major developers used to fund acquisitions.
Deal Financing
As part of the push to generate cash for deals, developers and financial institutions plan to raise at least 217 billion yuan ($33 billion) via acquisition bond sales and credit lines this year, Bloomberg calculations based on public announcements show. Still, the amount to be generated remains small compared with the $90 billion in local and offshore notes that developers need to repay or refinance this year, according to Bloomberg data.
So far, it’s unclear how much of the money raised through M&A bonds will be used to buy assets. State-owned China Merchants Shekou Industrial Zone Holdings Co. — a relatively stable builder of industrial parks whose yuan bonds trade at par — said it planned to use 43% of its 3 billion yuan M&A bond to refinance previous deals. The remainder will be used to pay down debt. Two-thirds of Shenzhen-based Overseas Chinese Town Enterprises Co.’s 1.5 billion yuan medium-term note was used to replace an earlier loan coming due.
“In the present environment, no property developer feels comfortable about its liquidity, so there is little appetite to use scarce capital to buy assets,” said Paul Lukaszewski, head of corporate debt for Asia Pacific at abrdn Plc in Singapore.
Some prime assets have sold at deep discounts, reducing incentives for developers without immediate payment pressure to sell. Holding out for a market rebound might be more favorable.
In January, Sunac China Holdings Ltd. sold its stake in a project in central Wuhan covering an area equivalent to 19 football fields to a unit of state-owned Beijing Capital Land Ltd. at a 59% discount, according to people familiar with the matter. In late April, Guangzhou R&F Properties Co. agreed to sell its stake in a property project by the River Thames in London at a HK$1.84 billion ($234 million) loss.
Shimao, known for its portfolio of five-star hotels in prime locations, in January sold Hyatt on the Bund in the center of Shanghai for about 20% less than the appraised value, a person familiar said. The previous month, Shimao recognized a loss of HK$770 million from offloading a stake in a Hong Kong residential project to repay debt.
Sunac and Shimao didn’t immediately respond to requests for comment.
Quick Cash
Developers may sell at a discount or even take a loss to get quick cash but this may force them to part with quality projects, according to Tan Shengying, fixed-income analyst at HFT Investment Management.
“Selling assets could be considered costing the developer’s liquidity in the future,” Tan said.
More recently, buyers are prioritizing their own financial security by limiting deals to individual property projects, such as joint ventures in which they already hold a stake. China Overseas Land & Investment Ltd., the second-largest state-owned builder by sales, acquired stakes in a Guangzhou project from Agile Group Holdings Ltd. and Shimao.
“It would be great news if state-owned firms stabilize private property companies by buying 20-30% of their shareholdings,” said Dhiraj Bajaj, head of Asia credit at Lombard Odier, a top 10 investor in China’s junk property bonds. “Unfortunately, we are not seeing that trend. Frankly, it is too late for most privately owned developers now.”
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.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
