Chinese developers face major oversupply threat
CHINESE developers will probably face more challenges this year because of an oversupply of housing in smaller cities.
Sourcing of financing, including from non-banks, will narrow, according to 26 economists and analysts surveyed from March 24 to 31.
Developers in regions where the housing market slowed and access to financing shrunk face rising default risks, Standard & Poor's Ratings Services said in a January 17 report.
"Oversupply remains the top concern of the real estate sector," Qinwei Wang, London-based economist at Capital Economics, wrote in the survey.
"Inventories have continued to rise, with the situation vulnerable in some third cities. Looking ahead, the increase of demand for new properties will probably be far weaker than over the last decade."
The pressure on Chinese developers as economic growth slows and the government allows local cities to implement their own housing curbs was underscored by the collapse of a developer in a city south of Shanghai last month. (Bloomberg)