Chinese property giant in trouble?

Posted on 30 Apr 2016 | Comments Off on Chinese property giant in trouble?

Evergrande is reportedly the most indebted China-listed property firm.

China’s second-largest developer, Evergrande Real Estate Group, claims it can meet debt obligations despite Standard & Poor’s assessment that the company is now vulnerable to non-payment, after debt doubled in the past 12 months, reported Bloomberg.

According to data compiled by Bloomberg, the developer is now the most indebted of the 198 listed real estate firms in China.

Jimmy Fong, investor relations official at Evergrande, said the group will meet its near-term obligations after a property market pick up had improved liquidity.

However, there is still a 6.2 percent probability that Evergrande will miss payments in the next year, according to Bloomberg’s Default Risk model. The model tracks metrics including share performance, liabilities and cash flow.

“Default risk has risen as Evergrande leverages up aggressively to speed up construction and land acquisition, as well as expansion into non-property related businesses,” said Tony Chen, credit analyst at Nomura Holdings. “Refinancing needs are very heavy.”

There was a massive 90 percent jump in total debt at Evergrande in 2015, and Bloomberg reported that this total was 15 times what the company earned before interest, taxes, depreciation and amortisation. This figure happens to be more than double the industry median of 6.6 times.

Data also revealed that the Chinese developer has CNY159 billion of obligations due before the end of 2016, and CNY54.8 billion in the following year.

That led to Standard & Poor’s cutting Evergrande’s unsecured bond rating to CCC+ in April. This rating means it is vulnerable to non-payment and dependent on favourable business conditions.

Moody’s Investors Service also has concerns about the company, detailing in a report that the debt-fuelled expansion has weakened the developers’ credit quality despite the improved liquidity.

“We have CYN164 billion of cash on hand at the end of 2015 and we achieved CNY67 billion of contracted sales in the first quarter this year, which will reduce leverage,” Fong said. “Most of the debt due this year can be easily be rolled over.”

This article was first published on DDproperty.com, Thailand’s leading property site.

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More launches around the corner

Posted on 30 Apr 2016 | Comments Off on More launches around the corner

With recent launches being warmly received by the market, developers are poised to unveil more residential projects in the coming months, reported The Straits Times.

Last weekend, two new developments reported healthy demand following the start of sales.

Qingjian Realty’s The Visionaire executive condominium (EC) in Canberra Link found buyers for 158 of the 632 units at an average price of $811 psf.

Sturdee Residences by Sustained Land at Jalan Besar moved 122 of the 305 units at an average price of $1,550 psf during its preview, before its official launch this Saturday (30 April). Most of the units transacted were one- to two-bedroom units, while three out of the eight penthouses were sold. Of the latter, two units measuring 1,830 sq ft each were sold for $3.2 million apiece.

“Buyers have all along been very interested in property despite the measures, but they are very selective,” said Eugene Lim, ERA Realty’s Key Executive Officer. “Project attributes and pricing are important, and developers are likely to price attractively,” he added.

Given the strong interest in these launches, more developers are following suit.

This weekend, Frasers Centrepoint Limited and Keong Hong Holdings will jointly launch Parc Life EC, which received more than 700 e-applications after the application period closed on Sunday (24 April). Situated in Sembawang Crescent, the project contains 628 units priced from $770 psf to $800 psf.

The sales gallery for Gem Residences in Toa Payoh is also set to open this weekend, with bookings commencing in end-May. Developed by Evia Real Estate, Gamuda and Maxdin, the average price of the 578-unit project is around $1,480 psf.

Moreover, Cheung Kong Property is anticipated to begin pre-sales for Stars of Kovan next month. The mixed-use project along Tampines Road features five strata terraces, 46 shops and 390 condo units, which cost around $1,550 psf to $1,600 psf.

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