Source : Business Times - 3 Mar 2009
Some of China’s largest real estate developers may be at risk of defaulting on their debt this year because of liquidity problems and a ‘challenging’ environment, according to Standard & Poor’s.
‘If, as seems probable, the real estate market remains volatile with a low transaction volume and falling sales prices, we are likely to see more defaults,’ Bei Fu, an S&P credit analyst, wrote in the statement.
Home prices in China fell 0.9 per cent in January, the second consecutive monthly decline and the longest losing streak since the government started issuing the data in August 2005.
Property prices more than quadrupled in the five years through 2007 as urban incomes rose.
‘We expect the developers’ 2008 results to be weak and their financial performances in 2009 could be even worse,’ Ms Fu wrote. She did not identify which developers are in danger of defaulting.
China’s real-estate developers do not expect the property market to rebound until at least the second half of this year, as prices must fall further to attract more buyers, Goldman Sachs Group analysts Thomas Deng and Kinger Lau wrote in a report on last Wednesday.
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