2012-01-19

Layoffs hit Chinese developers; over $50 billion in trust assets come due, up to 15% at risk

Chinese real estate developers could not hit their year-end targets. The result is big cuts to prices and workforces. A multitude of articles are available at: 不能完成的“目标”

业内称大部分房企都在裁员:最高裁员比例为60% (Developers all cutting staff: largest layoffs hit 60%). This article says that most layoffs are around 30-40% of the workforce. Most are larger firms and the cuts are coming at regional offices, not headquarters. Some small firms have closed, but most do not need to cut staff. Rumors of 90% cuts in some places (seems to definitely be a rumor for now), while analysts expect job losses to exceed the levels of 2008.

绿城甩卖项目融资3亿 拉响房企资金链紧绷预警 Greentown sells 4 properties for $300 million. The firm has used a lot of equity financing in the past, but now it has to start selling inventory.

开发商年底卖房花样多 11种促销新招一览 11 year-end sales tactics. The list below includes cities all around China, with some methods covered on the blog before, such as allowing a home-buyer to sell the property back.


六成一线房企未完成销售目标 绿城中国降37% Greentown sales fall 37% in 2011, it can only fulfill 64% of its sales target for the year.

And the most important, due to knock on effects in the banking system and financial markets: 2012房企面临还债难题 3500亿地产信托将到期 350 billion (RMB) in real estate trust assets come due in 2012. 10-15% of these projects are at risk for default. 2010 was the peak year for issuance of real estate trusts and their duration is 1 to 2 years, which makes this look very similar to the subprime debacle in the run-up to the U.S. housing market peak. We may see more inventory selling and with it falling prices, as firms raise capital to pay back their debts.

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