Banks hold intensive talks with housing developers, aiming to propel industry toward stability

Chinese banks have been holding intensive talks with real estate enterprises recently, aiming to assess and align with their financing needs. This signals a commitment to supporting housing developers in financing and stabilizing the housing market. Experts suggest that the industry is poised for gradual stabilization under policy support, with expansive opportunities for future development.

Following meetings held by China Construction Bank (CCB) and Bank of Communications with developers, Agricultural Bank of China is also reported to have talks with executives from companies such as China Vanke Co and Longfor Group.

During these sessions, banks listened to developers’ financing needs, facilitated project alignments and planned to establish long-term and stable cooperative relationships.

Country Garden has been invited to participate in a meeting organized by Industrial and Commercial Bank of China, domestic news site thepaper.cn reported on Thursday.

It is anticipated that lenders will step up financial support for developers, including private firms, enhance the financing environment, and consequently improve the industry’s overall outlook, experts said.

Since the introduction of the “home delivery assurance” policy in July 2022, CCB has provided financing for 76 projects, resulting in the delivery of more than 30,000 apartments, according to media reports.

CCB noted in a statement on Monday that it had held meetings with six housing developers – Longfor Group, China Vanke Co, Seazen Holdings, Hangzhou Binjiang Real Estate Group, Midea Real Estate Group and Dahua Group.

The lender said that as urbanization in China continues, with a sizable population waiting to become new urban residents, housing demand will continue to rise. The pivotal role of the real estate industry will not change, and over the long term, the sector has a solid foundation and extensive space for growth.

The intensive dialogues between banks and developers indicate productive progress in related policy implementation, Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, told the Global Times on Thursday.

Major lenders are expected to ramp up efforts to support developers, which could involve steps such as establishing “fast-track” loan approvals and reducing interest rates for housing loans, among other measures, Yan said.

Local governments have also rolled out measures to support the healthy development of the housing sector. For instance, in places like Jieyang, South China’s Guangdong Province and Tangshan, North China’s Hebei Province, policies have been optimized, including subsidies for home purchases and higher loan limits for families with multiple children in housing provident funds.

“A good news for China’s property developers is that a bottom is in sight,” said S&P Global Ratings in a recent report.

China’s property sales will follow an extended L-shaped recovery, finding support at annual sales of 10-11 trillion yuan ($1.4-1.54 trillion). Sales will drop about 5 percent in 2024, the report said.

Rounds of policy support aimed at the upper-tier cities will see these markets stabilize first, while lower-tier cities are still contending with excess supply and weak demand, the report said.

Hui Jianqiang, a veteran industry analyst, said on Thursday that the real estate cycle is a lengthy one, making a quick rebound unrealistic. In the short term, there may be a gradual easing of the industry downturn, which could be seen as a process of “reaching the bottom.”

But there is still development potential in the real estate industry and the key is to establish a new paradigm for its development, Hui told the Global Times.

Though sales of commercial housing may continue to decline, demand is expected to be released through government-led “affordable housing” construction, Hui noted.

Demand will still arise in the process of demolishing old and rundown housing, Hui said, “China’s urbanization process will continue to advance.”

In late October, the central financial work conference stressed that measures should be taken to promote a virtuous cycle between finance and real estate.

These measures could include a better regulatory system for real estate enterprises and fund management, macro-prudential management of real estate finance, and equal treatment for different types of real estate enterprises in meeting their reasonable financing needs.

Global Times

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