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Evergrande’s Proposed Shift From Real Estate To Electric Vehicles Fails To Convince – Forbes

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Hui Ka Yan has finally revealed his plan to save China Evergrande. He wants the embattled property developer to shift its focus from real estate to manufacturing electric vehicles, but skepticism abounds.

Despite having never sold a vehicle, Hui’s aim is to turn away from Evergrande’s main business and become an EV maker within the next decade, the state-run Securities Times reported late Friday evening, citing an internal meeting held on October 22.

The proposal sent shares of his Hong Kong-listed EV unit, China Evergrande New Energy Vehicle Group, soaring as much as 17% on Monday before closing the day with a gain of 11.4%. But the company still trades at just a fraction of its peak market value of $86.7 billion that it reached in mid-April after tumbling 94% since then.

Analysts, however, have expressed their skepticism. It remains unclear whether Evergrande, now close to collapsing under $305 billion in total liabilities, has the expertise or capital to compete in China’s increasingly crowded EV field.

“Evergrande used to have a strategy of buy, buy and buy,” says John Zeng, a Shanghai-based director of China forecasting at consultancy LMC Automotive, referring to the property developer’s previous EV-related acquisitions. “Its approach was very simple and unpolished, and no one really knows how much technology it has mastered. ”

Hui currently has a net worth of $11.6 billion that is largely based on dividend payouts received over the years. He was a former steel factory worker when he first established Evergrande in 1997. Although he had no prior experience in producing EVs when he first announced his ambition to do so in 2019, he has since funneled more than $1 billion into a series of acquisitions that saw him gain control of National Electric Vehicle Sweden AB (NEVS) and buy a majority stake in battery maker Shanghai CENAT New Energy. The company said its first EV model Hengchi would be delivered from its Tianjin factory early next year, according to an October 11 post published on Evergrande’s website.

But its EV unit warned less than a month ago that it was encountering a “serious shortage of funds,” according to a September 24 stock exchange filing. The company said it had “suspended paying some of its operating expenses and some suppliers have suspended supplying for projects.”

Evergrande itself warned last week that there was “no guarantee” it will be able to meet its financial obligations. The company did not respond to emailed requests for comment.

Even if Hui eventually manages to begin producing EVs, how he would sell them is another question with no clear answer, says Yale Zhang, managing director of Shanghai-based consultancy Automotive Foresight.

“Building a sales channel from scratch is very capital intensive, and Evergrande doesn’t appear to have channels of its own,” says Zhang. “Plus, its current model is a concept car that is still quite some distance away from mass manufacturing and selling.”

Justin Tang, head of Asian Research at New York-based investment and advisory group United First Partners, says the billionaire may simply be trying to boost investor confidence. Hui also pledged during the same meeting to deliver Evergrande’s unfinished properties to homebuyers, saying the company “in principle” won’t buy land over the next ten years, and would reduce the scale of its property development business “by a large margin,” according to the Securities Times report.

The company said separately via its WeChat public account that its 40 real estate projects in places including Guangzhou and Foshan are progressing “smoothly and orderly.” Last week, Evergrande narrowly avoided default by paying a $83.5 million bond coupon just before a 30-day grace period was about to expire.

But Evergrande faces more interest payments down the road, and $3.5 billion of its offshore bonds are expected to mature in March. The cash-strapped company has been struggling to raise funds through asset sales and other means, and market doubts over whether it can meet its debt obligations continue to persist.

“Where is the money coming from?” asks Tang, adding that Evergrande “doesn’t have time as a friend,” and its proposal of saving itself by making cars has “lots of questions but no real answers.”

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A Large Canadian Real Estate Brokerage Has Forecast Prices Will Rise Up To 20% – Better Dwelling

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  1. A Large Canadian Real Estate Brokerage Has Forecast Prices Will Rise Up To 20%  Better Dwelling
  2. House prices in Canada will rise higher in 2022, real-estate report says  CTV News
  3. Canada’s Real Estate Prices are Expected to Rise 9.2% in 2022: RE/MAX  Storeys
  4. Housing prices in Ottawa will rise five per cent in 2022, Remax estimates  CTV News Ottawa
  5. 2 Factors That May Impact the Real Estate Market in 2022  Real Simple
  6. View Full coverage on Google News



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Why real estate agents are urging Canadians not to wait for spring to sell their house – Ottawa Sun

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Rising mortgage rates could mean a spring slowdown for Canada’s housing market

Article content

The pandemic-triggered housing boom has shredded a number of long-standing assumptions Canadians have about real estate.

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Distance from, not nearness to, downtown cores is now a key buyer desire. Communities that were unpopular with buyers two years ago because of a lack of jobs or amenities are some of today’s most active markets. Even taking out a gargantuan mortgage in the midst of a crushing global recession went from “undeniably risky” to “par for the course” seemingly overnight.

And this Great Real Estate Rethink continues: A new survey by real estate brokerage Royal LePage finds that 79 per cent of real estate professionals think sellers should list their homes this winter rather than waiting until spring 2022.

Winter is traditionally the slowest season for home sales in Canada. But buyers have already tossed aside so many real estate traditions. What’s one more?

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Survey says…

The pro-winter listing sentiment is strong across all regions.

Realtors in British Columbia led the way, with 93 per cent of respondents in the province saying they would advise their clients to sell this winter; 87 per cent of agents in Quebec and 85 per cent of those in Atlantic Canada shared the same view.

The proportion of agents in favour of winter listings were lower in Ontario (72 per cent), Alberta (73 per cent) and the remaining prairie provinces, Manitoba and Saskatchewan (75 per cent).

While those numbers are all high, many of the real estate agents surveyed — at least half in every area of the country — were advising their clients to list in the winter even before the pandemic. The reason then is the same as it is today: A painfully low number of homes for sale has created a seller’s market so rabid that weather is the last thing desperate buyers are worried about.

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“Typically we see a seasonal adjustment in real estate activity,” says Adil Dinani of Royal LePage West Real Estate Services in Vancouver. “However, last year, we saw one of the busiest winter markets in our history. Even if there are fewer buyers in the winter, it is unlikely there will be enough inventory on the market to satisfy demand.”

That could be especially true in Toronto, where there were only 7,750 homes left on the market at the end of October.

“That’s versus 17,000 last year,” says Cameron Forbes, general manager and broker at RE/MAX Realtron Realty in Toronto.

But Forbes still believes that a spring listing is better for sellers, pointing out that since 1999 there have, on average, been more homes on the market in the winter in the GTA than in the spring. If selling in a low-supply market is the goal, why not wait until the spring, when the market will be even more depleted?

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“All things being equal, that’s a better time to sell your home,” he says. “That’s why agents will generally recommend that you wait to list in the spring market, when your home shows well and, frankly, when buyers are out looking to buy.”

Low supply vs. the harsh Canadian winter

You may have noticed that the areas where the preference for winter listings were lowest are in parts of the country where winter can be especially brutal. (Ontario’s placement in this category may have more to do with fears around what an extra three or four months might do to the province’s already sky-high prices.)

And this one could be particularly messy. Both The Weather Network and the Farmer’s Almanac are preparing Canadians for a potentially long, storm-filled winter.

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Article content

Can sellers in hard-hit markets really plan on buyers being hungry enough to brave the elements and view properties when winter’s at its most miserable?

Regina-based Royal LePage agent Shayla Ackerman, no stranger to extreme winter weather, says listing in the winter is not something she would recommend unless a seller has no other choice.

“Our winter market slows right down,” she says.

But in Montreal, which also receives its fair share of colossal snow-dumps, Century 21 Immo-Plus agent Angela Langtry expects buyers to be out in droves.

“We are still in a low-inventory market, especially for houses,” Langtry says. “I always say that the serious buyers come out in the snow storms.”

A spring housing slowdown?

Capitalizing on raging buyer demand is not the only reason to list your home this winter.

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Article content

The Bank of Canada announced in late October that it is ending a key pandemic emergency measure: buying billions of dollars in bonds to keep interest rates low, including those attached to mortgages.

If mortgage rates begin rising, and mortgage amounts begin shrinking, buyers may have less buying power in the spring. Listing now may give sellers one last shot at enticing buyers while they have more money to play with.

But Paul Taylor, president and CEO of trade association Mortgage Professionals Canada, isn’t sure a rise in interest rates will impact buyers’ budgets in the next few months.

“Almost everyone is qualifying at a 5.25 per cent stress test rate today,” Taylor says, referring to the benchmark interest rate lenders use to evaluate mortgage applicants’ ability to repay their loans.

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Even if the Bank of Canada were to raise interest rates by 100 basis points, or one per cent, over the next 12 months, Taylor says buyers who qualified at 5.25 per cent would still have at least 200 basis points worth of breathing room, meaning their mortgage budget “will be effectively unchanged.”

Taylor expects a 0.25 per cent increase in the BoC’s overnight rate, which should trigger a rise in variable mortgage rates, in the spring. He says two additional increases could occur before the end of 2022.

“I expect the media coverage of the tiny rate increases will scare many and slow the market, which is likely very good for everyone, but I don’t think we’ll see enough of a slowdown to erode prices,” Taylor says.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

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Why real estate agents are urging Canadians not to wait for spring to sell their house – Financial Post

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 on


Rising mortgage rates could mean a spring slowdown for Canada’s housing market

Article content

The pandemic-triggered housing boom has shredded a number of long-standing assumptions Canadians have about real estate.

Advertisement

Article content

Distance from, not nearness to, downtown cores is now a key buyer desire. Communities that were unpopular with buyers two years ago because of a lack of jobs or amenities are some of today’s most active markets. Even taking out a gargantuan mortgage in the midst of a crushing global recession went from “undeniably risky” to “par for the course” seemingly overnight.

And this Great Real Estate Rethink continues: A new survey by real estate brokerage Royal LePage finds that 79 per cent of real estate professionals think sellers should list their homes this winter rather than waiting until spring 2022.

Winter is traditionally the slowest season for home sales in Canada. But buyers have already tossed aside so many real estate traditions. What’s one more?

Advertisement

Article content

Survey says…

The pro-winter listing sentiment is strong across all regions.

Realtors in British Columbia led the way, with 93 per cent of respondents in the province saying they would advise their clients to sell this winter; 87 per cent of agents in Quebec and 85 per cent of those in Atlantic Canada shared the same view.

The proportion of agents in favour of winter listings were lower in Ontario (72 per cent), Alberta (73 per cent) and the remaining prairie provinces, Manitoba and Saskatchewan (75 per cent).

While those numbers are all high, many of the real estate agents surveyed — at least half in every area of the country — were advising their clients to list in the winter even before the pandemic. The reason then is the same as it is today: A painfully low number of homes for sale has created a seller’s market so rabid that weather is the last thing desperate buyers are worried about.

Advertisement

Article content

“Typically we see a seasonal adjustment in real estate activity,” says Adil Dinani of Royal LePage West Real Estate Services in Vancouver. “However, last year, we saw one of the busiest winter markets in our history. Even if there are fewer buyers in the winter, it is unlikely there will be enough inventory on the market to satisfy demand.”

That could be especially true in Toronto, where there were only 7,750 homes left on the market at the end of October.

“That’s versus 17,000 last year,” says Cameron Forbes, general manager and broker at RE/MAX Realtron Realty in Toronto.

But Forbes still believes that a spring listing is better for sellers, pointing out that since 1999 there have, on average, been more homes on the market in the winter in the GTA than in the spring. If selling in a low-supply market is the goal, why not wait until the spring, when the market will be even more depleted?

Advertisement

Article content

“All things being equal, that’s a better time to sell your home,” he says. “That’s why agents will generally recommend that you wait to list in the spring market, when your home shows well and, frankly, when buyers are out looking to buy.”

Low supply vs. the harsh Canadian winter

You may have noticed that the areas where the preference for winter listings were lowest are in parts of the country where winter can be especially brutal. (Ontario’s placement in this category may have more to do with fears around what an extra three or four months might do to the province’s already sky-high prices.)

And this one could be particularly messy. Both The Weather Network and the Farmer’s Almanac are preparing Canadians for a potentially long, storm-filled winter.

Advertisement

Article content

Can sellers in hard-hit markets really plan on buyers being hungry enough to brave the elements and view properties when winter’s at its most miserable?

Regina-based Royal LePage agent Shayla Ackerman, no stranger to extreme winter weather, says listing in the winter is not something she would recommend unless a seller has no other choice.

“Our winter market slows right down,” she says.

But in Montreal, which also receives its fair share of colossal snow-dumps, Century 21 Immo-Plus agent Angela Langtry expects buyers to be out in droves.

“We are still in a low-inventory market, especially for houses,” Langtry says. “I always say that the serious buyers come out in the snow storms.”

A spring housing slowdown?

Capitalizing on raging buyer demand is not the only reason to list your home this winter.

Advertisement

Article content

The Bank of Canada announced in late October that it is ending a key pandemic emergency measure: buying billions of dollars in bonds to keep interest rates low, including those attached to mortgages.

If mortgage rates begin rising, and mortgage amounts begin shrinking, buyers may have less buying power in the spring. Listing now may give sellers one last shot at enticing buyers while they have more money to play with.

But Paul Taylor, president and CEO of trade association Mortgage Professionals Canada, isn’t sure a rise in interest rates will impact buyers’ budgets in the next few months.

“Almost everyone is qualifying at a 5.25 per cent stress test rate today,” Taylor says, referring to the benchmark interest rate lenders use to evaluate mortgage applicants’ ability to repay their loans.

Advertisement

Article content

Even if the Bank of Canada were to raise interest rates by 100 basis points, or one per cent, over the next 12 months, Taylor says buyers who qualified at 5.25 per cent would still have at least 200 basis points worth of breathing room, meaning their mortgage budget “will be effectively unchanged.”

Taylor expects a 0.25 per cent increase in the BoC’s overnight rate, which should trigger a rise in variable mortgage rates, in the spring. He says two additional increases could occur before the end of 2022.

“I expect the media coverage of the tiny rate increases will scare many and slow the market, which is likely very good for everyone, but I don’t think we’ll see enough of a slowdown to erode prices,” Taylor says.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

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