What’s new: Chinese developer Soho China is offering 32,000 square meters of residential and commercial properties in Beijing and Shanghai at a 30% discount.
The proceeds will be used to repay debt and won’t be used for dividends, Soho China Chairman Pan Shiyi said Thursday in an online pitch for the properties to real estate agents.
Buyers will be required to pay in full, and mortgage loans won’t be accepted, Caixin learned.
To encourage agents to sell the properties, Soho China raised the commission bonus to 4% of transaction value, much higher than the industry average. Commissions for commercial properties are typically 1% of transaction value, according to a commercial property analyst.
One apartment in the first batch of listings, in Beijing Sanlitun Soho, is priced at 49,000 yuan ($7,750) per square meter, compared with 60,000–80,000 yuan per square meter currently being asked by sellers of similar units in the same building.
Pan said some of the company’s debts are about to mature. At present, Soho China’s net assets-to-debt ratio is about 44%, a relatively low level in the industry.
The background: China’s property industry crashed in the second half of last year as regulatory curbs on borrowing left developers struggling to repay debts and raise money to fund construction. As builders’ financial woes deepened, confidence among homebuyers collapsed, leading to a slump in sales.
The financial squeeze on China’s property developers shows little sign of easing, with total fundraising by 100 of the country’s largest builders monitored by consultancy China Real Estate Information Corp. (CRIC) slumping in February to its lowest in four years.
Financing pressure is likely to increase over the course of 2022 as the 100 developers face obligations to repay more than 600 billion yuan of maturing bonds both at home and abroad, CRIC said Feb. 23 in a report.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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