A newly built property seen from above in Hangzhou, Zhejiang Province, China, on December 15, 2023.
Photo | Future Publishing | Getty Images
Chinese real estate stocks rose after the People’s Bank of China announced measures to increase liquidity available to property developers.
The move will ease a lingering cash crunch for Chinese developers, who have been the target of a Chinese government crackdown aimed at tackling the sector’s ballooning debt levels.
The CSI real estate index rose 5.2%, while the broader mainland CSI300 index rose 1.8%.
Hong Kong-listed Country Garden shares rose 2.94%, Logan Group rose 5.17% and Longfor Group rose 4.61%. Hong Kong’s Hang Seng Mainland Property Index rose 3.9%.
The People’s Bank of China and the Ministry of Finance announced in a joint statement late Wednesday that these new measures will remain in effect until the end of 2024.
Banks are now able to provide loans to commercial real estate companies that have passed completion inspections and acceptance inspections, obtained real estate ownership certificates, and started operations, with substantial benefits and using operating real estate as collateral. Ta.
China’s real estate crisis could take years to resolve, with Oxford Economics estimating that it will take at least four to six years for the country’s developers to complete unfinished residential properties.
The world’s second-largest economy grew 5.2% last year, meeting the Chinese government’s target despite a worsening slump in its real estate sector.
China’s real estate developers are facing serious debt problems, with some of the largest companies filing for bankruptcy.
China’s real estate problems are closely tied to the finances of local governments, which typically rely on land sales to developers for a significant portion of their income.
Concerns are increasing financial risks and stalling consumer confidence as consumer prices teeter on the edge of deflation.
—CNBC’s Clement Tan and Evelyn Cheng contributed to this report.