Ganzhou Real Estate Market In A Depression

The First Real Estate Bankruptcy of 2015 came in Ganzhou, Jiangxi. It was a short post, the entirety of it was:
A real estate firm in Ganzhou, Jiangxi province has gone bust. The company owes nearly ¥2 billion in debt and the boss has been detained. He's suspected of illegal fundraising among other illegal activities. The firm also sold homes to customers and simultaneously used them as collateral for loans. In one building, dubbed a "disaster area", there are 155 such properties.

Now there's more to the story, and it isn't an isolated case, but rather the result of a market depression.

Land sales have fallen off a cliff. In 2012, Shangyou county made 30 land transactions (998.85 acres), for 1.42 billion yuan; in 2013 a total of 30 land transfer (2712.21 acres), went for 600 million yuan, due to plunging land prices. Sales in 2014 will probably come in at under 100 million yuan.

With this backdrop, the real estate market has entered a depression and the situation may be worse than Handan in 2014 (Handan Residents Afraid to Buy Homes; Market Frozen With Developers on the Brink) because the state of the economy and real estate market is much worse.

Are Shangyou real estate market is really very healthy, very well run is it? "Daily Economic News" reporter through local fieldwork interviews found that the local real estate market and the status of some of the projects are indeed facing huge financial pressure of poor sales, management is really not optimistic.

"Most real estate developers Shangyou local businesses, few outside companies, and small and medium-based developer." Wenxing road a real estate company official told reporters, in addition to the real estate company had long hair outside of bankruptcy, There are a number of real estate projects is also very serious, "and even some real estate boss could not carry, such as [a local project], it has been turned over to others."

...Many developers rely on private financing of high interest

"At this time, often suffering the dual problems of SMEs and the financial pressure of high inventory upgrades." Jiangxi Provincial Academy of Social Sciences Institute of Economics Ma Zhihui believes that SMEs often do not have the ability to develop in the country, but can not with the first-tier cities The large room fought over, "continued downturn in the market makes a lot of small developers can not get sufficient cash flow, so the private real estate companies go bankrupt is not new."

..."Has long hair financing through private lending is not the case, almost the majority of small real estate needs through private financing." Liao Jiawei told the "Daily Economic News" reporter, local small and medium real estate companies are not favored by the banks, it is difficult to get a loan from the bank. " significantly higher than the cost of private lending banks, small and medium enterprises in the room after the opening bell, if we can not quickly digest, the cost will be higher and higher."

Cost of local financing monthly interest rate is generally between 2 to 3 percent.

iFeng: 赣州首现开发商破产背后:市场可谓一片萧条 (Ganzhou first bankrupt developer back story: the market can be described as a depression)

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