Listed Developer Financing Costs Rise Nearly 30%

Among 71 listed developers on the Shanghai and Shenzhen markets, financing costs increased by ¥1 billion in the first half, or nearly 30% yoy. Slower home sales have slowed the return of capital and increased the developers' financing needs.

Here is Bloomberg: China Developer Debt Risk Rises as Sales Miss: Chart of the Day
China’s largest property developers risk missing their full-year sales targets as tighter credit and an economic slowdown cut demand for real estate, fueling concern the industry will struggle to repay debt.

Here is iFeng:
71家房企财务费用暴涨10亿元 同比增长近三成
Editor's note: The buyers generally expect prices will be significantly reduced, while the capital markets of the future housing prices putting a question mark. Financing costs of housing prices will undoubtedly increase substantially. This is to some extent, also exacerbated the tension in the room rate funding chain. In a number of factors together, not difficult to predict, housing prices, "price change" efforts will be further deepened.

As of August 23, the "Securities Daily" reporters According to Wind Info statistics found, according to the real estate industry classification SW, Shanghai and Shenzhen has 71 housing prices (nearly three full financial index company) announced in 2014 reporting the results, accounting for 50% of the 142 housing prices, the financial costs soared nearly 10 billion yuan, while in 2013 year on year over the same period increased by only 300 million yuan.

It is noteworthy that, in the above 71 Housing prices in China corporate finance fee beat Vanke [ Introduction News ] topped the list, the amount of up to 450 million yuan; financial costs were minimal for Guangyu [ Introduction News ] development, the amount of to -1821 million.

In this regard, Rand Consulting CEO Song Yanqing to the "Securities Daily" reporters, corporate finance fees rise reflects the developer of the project to borrow more debt to climb. Meanwhile, housing prices of existing homes inventory is large, slow turnaround projects.

Finance costs soaring refrain

According to Wind Info statistics show that the 71 public housing prices in the first half of the financial expenses totaled 4.35 billion yuan, an increase margin of 28%; while the first half of 2013 that 71 listed companies in financial expenses amounted to 3.399 billion yuan , 2012 compared to the same period 3.123 billion yuan, an increase of the magnitude of its 2013 financial expenses over the same period was approximately 9%.

Thus, compared with the same period in 2013 housing prices up slightly increase financial expenses, in 2014 turned over the same period rose sharply, by nearly 20 percentage points.

According to the above-mentioned 71 Housing prices listed in the report shows that 13 financial expenses is negative, 58 positive. Among them, 14 fangqi financial costs more than 100 million yuan, five more than 200 million yuan.

Housing prices in the first half from the specific performance of the financial costs of the flowers, the China Enterprise beat Vanke topped the list, the amount of up to 450 million yuan; Vanke to 396 million yuan in the second position; while the first open [ Introduction News ] shares and real estate investment followed.

It is worth noting that, according to Wind Info statistics, Oceanwide Holdings Financial expenses for the first half of this year, 50,309,800 yuan, 76,266,500 yuan compared with the same period in 2013, down 25.9567 million yuan, the financial costs fell by about 34 %; while Street [ latest news Price Unit Reviews ] in the first half of this year, compared with 173 million yuan of financial expenses, compared with 090 million yuan over the same period last year, up rose 083 million yuan, an increase of more than 90%.

However, with respect to the financial cost has been effectively controlled by the number of housing prices, the financial cost of an increase in the number of housing prices is more.

In this regard, insiders told reporters that in recent years, housing prices in the country's limited financing channels, through the capital markets and bank loans are very difficult, most developers go through the Trust financing channels, its financing costs basically in 10 % or more, and even individual housing prices folk want to survive a loan shark. In view of this, many sea financing of housing prices, but in mainland China property market turnover continued to decline, the property market return on investment is not high in the background, foreign investors do not buy a low-cost account corporate financing, which led to a certain extent Cost of housing prices in overseas financing and even rose to more than 7%.

Obviously, the high interest payments increased the financial pressure, but also more financial pressure test of the ability of real estate companies.

Project turnover rate pressure

"Housing prices and the debt limit its financial cost is proportional." Another industry source told reporters that in 2013, the majority of housing prices to buy a lot of land, and its liabilities increased a lot, which is obviously also further enhance There proportion of its interest-bearing liabilities, increased its financial cost burden.

It is worth mentioning that, Song Yanqing also to the "Securities Daily" reporters, said, "In the real estate development, project completion record for the point of view of the case, if the occasion of the completion of the project had not yet been repaid development projects are completed interest loans, so the more sales of existing homes yet, the greater the financial cost index will give enterprises the pressure. "

And look at the property inventory and turnover in the first half of this year, the majority of the sales target completion rate of housing prices than expected at the beginning of the project lengthening sales cycles, slow turnover rate, the birth of the real estate business financial expenses rose phenomenon.

In fact, the majority of housing prices have been aware of the financial costs in the real estate project development costs rising phenomenon, in view of this, the majority of housing prices are higher turnaround strategy, speed up the project with the turnover rate and reduce interest payments.

The reporter was informed in multiple interviews, almost all major benchmark of housing prices in vigorously promote the development of standardized product line copy, because that product line development can achieve fast positioning, rapid design, rapid strokes mining, rapid construction, quick sales and fast cash flow balance, but also can improve project turnover rate, reduce the financial pressure.

In addition, the individual strength of housing prices in order to be able to borrow money at lower interest rates, all strive to build the A + H share listing and financing platform, domestic financing costs close to 7% of the difference between the space for housing enterprises competing to get through Hong Kong, China listing platform. From Vanke, green spaces and other benchmarking enterprises to seek to change the transition Oceanwide Holdings and other developers have done to open up the domestic double plus the overseas capital market financing platform strategy, which aims to expand financing channels for nothing more than background in highly leveraged operations Under strive to reduce financial costs arising from high debt, and thus enhance corporate profits.

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