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Real Estate Investment
Shanghai Statistics Bureau
Chinese Property Developers
Chinese Developer Lending
According to a report on the Shanghai Statistics Bureau website, Shanghai property developers borrowed a total of 74.1 billion Yuan last year. This represents a fall of 9.6% compared to 2010, which conversely saw lending increase by 28.6% on 2009.
The government's measures to cool the property market are thought to have been behind the drop, not only in the drop in demand caused, but also directly in their restriction of lending to the sector.
According to the report the developers successfully raised a further 320.7 billion yuan in funding from other sources, which is down just 0.7% compared to 2010. This is a pleasant surprise as it shows that investors still have confidence in the sector, if only for the long term. The confidence though, seems to be coming from within China only, as funding from foreign investors fell 54.7% compared to 2010. Meanwhile internal capital rose 11% according to the bureau.
As has been noted in many reports now, the government has targeted the market from all sides. While increase in minimum down payments on second homes, a ban on mortgage lending for subsequent homes and other measures squeezed demand from buyers, the direct restrictions on lending to developers squeezed them. According to the bureau report, Shanghai developers sold 17.7 million square metres of property in Shanghai last year, a fall of 13.8 percent on 2010.
As has been predicted though, investors have been quick to adapt and invest in the affordable housing sector. While the government is squeezing the open market, it is also increasing its commitment to making more affordable housing available. As a result a 43% increase in investment in the affordable housing sector fuelled an overall 9.6% year on year increase in Shanghai real estate investment to a total 217 billion Yuan.
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