Two more Chinese developers declare bankruptcy

Developers fail in Guangdong, Hangzhou
Two more property developers in Guangdong and Hangzhou have filed for bankruptcy, highlighting the growing pressure on cash-strapped small players that are struggling amid Beijing's efforts to cool the housing market.

Guangdeye Property Development in Shunde, southern Guangdong, declared bankruptcy on Wednesday due to its inability to repay debt, according to the People's Court in Shunde.

The private firm has not undertaken new projects since completing a commercial project, Shunde Commercial City, in 2008, when it reportedly started encountering financial difficulties.

Over in Hangzhou, Hangzhou Jinxiu Real Estate, which was developing a luxury serviced-apartment project on the West Lake, has reportedly filed for bankruptcy. It comes a week after the collapse of Hangzhou Glory Real Estate, says Hangzhou's news website, zjol.com The firm was unavailable for comment.

David Ng, a property analyst at Macquarie Equities Research, believes more small players would fold if the property downturn persists.
Yesterday in Hundreds of billions in private placements are just covert loan sharking; high interest loans masquerade as equity stakes, I noted that small and medium developers made use of extremely high-interest loans. Even though the large developers and the overall housing market may appear sanguine, there can be a financial disaster underneath as small firms go belly up and investment trusts eventually take losses.

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