Xingrun Leaves Ghost Homes and It's Office Has Become a Club; 90% Of Real Estate Businesses in China Could Go Bust?

Zhejiang Xingrun, the developer that went bust on projects in Fenghua, a part of the city of Ningbo, has left abandoned property and developments in its wake. Below is the office, with the neon sign down, and an unfinished project with the scaffolding torn down.

兴润置业崩盘照：公司变会所 项目成鬼楼

It is reported that in January 2010, Xing Yun home to 660 million yuan photographed Taoyuan mansion block, equivalent to the floor price of 7,852 yuan / square meter. Sales information from the Internet to see, Taoyuan mansion detached and townhouses in the main house area 300-600 square meters, is expected to settled in time for the 2013. However, with land prices plummeted, in December 2013, another company took in the surrounding residential plots equivalent to the floor price is only 3,204 yuan / square meter. Poor people land of startling, March 19th, 21st Century Network project sites visited site in Taoyuan, very different in full swing with the surrounding site, the project site had completely shut down.

But scenes look at the construction site, townhouse apartment exterior has not been processed, the red wall is still bare scaffolding jobs available already been removed. Workers also left at the scene, according to the job description, "the site has no responsible person here, only to find all the sales office to find sun tea." The three workers' jobs are still only responsible for the dismantling of scaffolding shipment is not clear site issues.

In the workers' living quarters, simple board room also have been deserted. Nearby residents said the company has gone, and now the entire site is only one keeper. According to curators had told the media that the site due to non-payment of electricity bills, have power for several days.

21st Century Network found that the construction site of the propaganda posters, the most recent time a notice is posted before the Spring Festival in 2013. Billboards displayed on the site, the project construction area of ​​about 100,000 square feet, with a total cost of about 220 million yuan.

Also out today on the Xingrun story is one analyst saying the bankruptcy of the firm could eventually leave 90% of the developers in the city unable to repay debt.

兴润资金链断裂撕开楼市泡沫 专家称90%地产商资不抵债

Indeed, Xing Sheen capital chain as early as four years ago, has already begun under pressure, during which the local government has repeatedly convened a meeting of financial institutions, "requires all banks to maintain existing credit, lower interest rates, the loan shall not be later than the mortgage pressure and take the financial resources given to lending. "

Which led to the fall of housing prices this reason, but also with the local government to raise land prices are not unrelated.

According to earlier media reports, in January 2010 Zhejiang 江兴润 home price of 660 million yuan, looks Fenghua piece of residential land, equivalent to the floor price of 7,852 yuan / square meter. Three months ago, near a floor area ratio of residential land auction close, sell to the floor price of 3,204 yuan / square meter.

Only in this land, Xing Sheen assets shrank 390 million yuan. And in the urban redevelopment project changting village, because land prices in the company's assets shrunk by at least one billion yuan.

Meanwhile, the Chinese real estate market in 2013 was reversed, four-tier cities market is basically saturated, developed serious excess capacity, only the first-tier cities and some second-tier cities, there is a large space, so let housing prices Loans - take place - Development - loans which cover 10 pot seven games to keep playing, the first house unimpeded Days sales outstanding, Days sales outstanding part of a problem once the capital chain is facing collapse.

"Xing Yun Chinese real estate buyers just the beginning of a collapse of housing prices in the future there will be more to play 10 pot 7 cover real estate developers to collapse, it does not exclude billion housing prices appears this situation, most of the Urban real estate flower drum pass game is almost complete, the real estate bubble burst by no means isolated cases Hing home run. "above real estate insiders told the 21st Century Network.

I haven't heard of 10 pots 7 covers game, not sure if this guy made it up, but I assume this is a reference to a game similar to musical chairs. In short: the music has stopped and a lot of people have no seats.

As for that 90% figure......

90% of the real estate insolvent?

China Financial Intelligence chief financial experts, the Central Institute of Finance and Wang Hao in his blog, said Xing-run home run away tide mark the advent of real estate, whether the central regulation or not, the real estate bubble will burst.

From the data released so far this year in terms of housing prices, both in terms of investment or sales, growth in China's real estate market has been showing signs of fatigue.

March 13, the National Bureau of Statistics announced in January and February 2014 the national real estate development and sales, from the data, in 2014 the main feature is the 1-2 month decline year on year growth. Main features:

1-2 month national real estate development and investment 795.6 billion yuan, up by 19.3% nominal growth, the growth rate down 0.5 percentage points lower than last year, investment growth fell slightly; nationwide housing sales area of 104.66 million square meters, down 0.1%, while commercial sales of 709 billion yuan, down 3.7%; development enterprise funds - has entered a smooth year, the national development enterprises from January to February increased availability of funds throughout the year, down from 26.5 percent last year to 12.4%.

Nomura Securities recently released report also pointed out that the number one risk facing the Chinese economy is not the shadow banking or local government debt, but the transition Investment real estate market.

Wenzhou City Intermediate People's Court, according to the official website show that last year a total of Wenzhou judicial auction listings 918, turnover 4.696 billion yuan, of which 52% were real estate finance mortgage bonds, involving more than 120 billion yuan of bad assets. The average real estate auction target amount over three million yuan, which makes the intention to participate in the auction bidders prohibitive, the annual judicial auction success rate of less than 5%.

"According to a recent case more than a year more than 100 cities, 90% of the Chinese real estate has long been insolvent, bank loans, trust, SME debt, private equity, private lending, loan-sharking and other financing instruments together and 90% on real estate debt ratio is above 150% -200%, "said Wang Hao.

However, according to data SWS an industry, real estate industry's gearing ratio was 73.27%.

Wang Hao is pessimistically that the current real estate are all full financing platforms listed room rate is less than the domestic financial capital, went overseas financing, but housing prices more expensive to pay for the last two years to get to heavy price, as long as the financial capital of less than 90% of the real estate will be the same as Xingrun collapsed

Regarding the Nomura report:
Default risks trigger fresh fears over China property market

"This risk does not seem fully recognized in the market partly because data are not readily available for these cities, and some investors may be misled by the boom in first-tier cities," Zhang said.

Nationwide, residential floor space per registered urban resident is forecast to have reached 37 square meters by 2013, compared with 35 in Japan and 33 in U.K., according to Nomura. And, if the current trend holds could reach 51 square meters by 2017.

"The ballooning supply in the pipeline will likely become increasingly difficult for incremental demand to absorb," Zhang said.