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Property News Weekly Digest
2021/9/18
〈Asian Post, Sep 18, 2021〉Two of property magnate Hui Ka-yan's staunchest allies appear to be bailing out of China Evergrande Group, selling a large chunk of the developer's stock ahead of a gathering storm and deteriorating credit ratings over its liabilities.

Joseph Lau Luen-hung, the founder of Hong Kong developer Chinese Estates Holdings, and his wife Chan Hoi-wan sold 138 million Evergrande shares in the past month for about HK$500 million, according to exchange filings.

They reduced their holdings in the Shenzhen-based developer to 7.96 per cent, second only to Hui's controlling stake of 70.7 per cent.

It follows an 85 per cent fall in Evergrande's stock price and market value in the past year, as the developer struggles to find cash to settle financial liabilities estimated at US$300 billion.

Every avenue of bank financing for Evergrande has been choked off by the People's Bank of China after the company, the world's most indebted developer, blew through all three of the central bank's "red line" debt allowances last year. Representatives of Chinese Estates and Evergrande declined to comment.

〈China Daily, Sep 17, 2021〉Housing has been the top priority of the Hong Kong Special Administrative Region government over the past years. From the Lantau Tomorrow Vision and green belts to temporary homes and even the "big debate" on land supply launched three years ago, many ways to supply land and affordable housing have been explored. Despite such endeavors, Hong Kong's housing problem has undeniably deteriorated, and it is worth a timely rethink on the approach.

The Centa-City Leading Index, which reflects Hong Kong's house prices, hit a record high again in early August, further demonstrating the great divide between the haves and have-nots.

The central government has made clear Hong Kong's housing problem is beyond tolerance. As Vice-Premier Han Zheng said, "The housing problem in Hong Kong is related to its history and development. Although it is difficult to solve the problem, we still need to start the work. If we just lay aside the problem and don't come to a consensus or come up with an idea, especially when a solution was about to emerge and then the operation of the Legislative Council was always interrupted by filibustering, Hong Kong people's interests will be harmed." With no more filibustering in LegCo, it is time for Hong Kong's political actors to come to a consensus to solve the problem.

〈The Strait Times, Sep 16, 2021〉Footage of Evergrande's management being held hostage in company offices by anxious retail investors made its rounds on China's social media earlier this week.

"I have with me Nanchang's top Evergrande representative surnamed Chen," said WeChat user Yang Qiwen, referring to the city in Jiangxi province in south-eastern China. The posting included a photo of a man lying on a floor.

"He can't leave the office. There are more than 300 of us (investors) stopping him," Mr Yang posted on one of at least three WeChat groups on the company's woes in the province. Each WeChat group is already at its maximum capacity of 500 members.

Retail investors around China are taking drastic measures to get their money back from embattled property developer Evergrande Group, which had offered them wealth management products in a move to ease a liquidity crunch.

The products rode on Evergrande's reputation as one of China's "too big to fail" firms, and attracted more than 70,000 retail investors with promises of up to 10 per cent in annual yield rates.

China's No. 2 property developer, Evergrande has more than 700 projects across 223 cities, most of them in less developed parts of the country.

〈Macau Daily Times, Sep 15, 2021〉ONE of China's biggest real estate developers is struggling to avoid defaulting on billions of dollars of debt, prompting concern about a broader economic fallout and protests by buyers of unfinished apartments.

Evergrande Group appears likely to be unable to repay all of the 572 billion yuan ($89 billion) it owes banks and other bondholders, financial rating agencies say. That might jolt financial markets, but analysts say Beijing is likely to step in to prevent wider damage if Evergrande can't manage an orderly resolution of its debts.

"In the unlikely event that a default unsettles the broader property market, significantly disrupting sales and investment, this could have farther-reaching macroeconomic effects," said Fitch Ratings analysts in a report yesterday.

Evergrande ran into a cash crunch after its borrowing to build apartments, office towers and shopping malls collided with pressure from the ruling Communist Party to reduce corporate debt loads that are seen as a threat to the economy.

Beijing has made reducing financial risk a priority since 2018. In 2014, authorities allowed the first corporate bond default since the 1949 communist revolution. Defaults have gradually been allowed to increase in hopes of forcing borrowers and investors to be more disciplined.

〈China Daily, Sep 15, 2021〉Mainland home prices grew at the slowest pace in the past eight months in August, as buying confidence took a hit from the government's cooling measures.

Troubles at China Evergrande Group, the world's most indebted developer that is struggling to complete its housing projects, also weighed on sentiment.

The average price of new homes across 70 major cities rose by 0.2 per cent month on month in August, slowing from a 0.3 per cent increase in July, according to figures released by the National Bureau of Statistics yesterday. In February, prices were up by 0.4 per cent, the highest this year.

“The softening property market was largely due to negative news surrounding the sector, such as restrictions to cap price growth for new and old homes in more cities and growing difficulties in obtaining mortgages,” said Andy Lee Yiu-chi, chief executive for southern China at property agency Centaline China.

He added that the property market was likely to undergo a correction, but was reluctant to predict the extent of the decline in prices.