Posts tagged ‘Real estate development’

06/05/2014

Fake Government Busted in China – China Real Time Report – WSJ

This must take top prize.

“China has seen its share of counterfeits, from fake Apple stores to fake reporters to fake Gucci. Now add fake government to that list.

State media recently reported that a “People’s Government of Dengzhou” set up in central Henan province was toppled after it was found, in fact, to be a fraud.

According to reports, the government was set up late last year by three residents who had gone so far as to counterfeit fake government seals and issue papers in the bogus government’s name. They also tried to build up their own “civil service,” sending out recruitment ads that attracted more than 10 applicants before the real government shut it down.

Apparently the trio wanted to independently annul their existing government on the basis of its “nonperformance.” They located the headquarters of their faux government adjacent to the real one.

This isn’t the first time Dengzhou has made headlines for unusual political news. Four years ago, government mouthpiece China Daily wrote a story about the city titled “Democracy takes root in rural areas.” It chronicled Dengzhou’s measures to involve more residents in the vetting of proposals relating to villages in the region, in what the publication called an “innovative experiment” that was also hailed at the time by then-Vice President Xi Jinping.

No one, evidently, thought the farmers would get quite so innovative.

In the end, the would-be bureaucrats were outed after they served a property developer a suspension notice and tried to levy penalties for illegal construction in the area. The developer got suspicious, and the trio were rounded up. They have been charged with the forging of government documents. Attempts to reach them for comment weren’t successful.

via Fake Government Busted in China – China Real Time Report – WSJ.

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02/05/2014

Leaked Comments From Top Property Developer: China Is Built Out – China Real Time Report – WSJ

Spring hasn’t sprung for China’s chilly housing market and it may not for some time, a high level executive with the country’s largest real-estate developer said in rare remarks leaked online.

A glut of apartments and tightness in the credit market don’t bode well for property developers, said Mao Daqing, vice chairman of China Vanke.

A Chinese flag flies in front of a residential building developed by China Vanke Co., in the Fangshan district of Beijing. Bloomberg News

“Overall, China has reached its capacity limit for new construction of housing projects, only some coastal third- and fourth-tier cities have potential for capacity expansion,” Mr. Mao, who oversees the firm’s Beijing operations, said at a closed door meeting in Beijing on Wednesday (in Chinese). “As to whether there is room for home prices to rise, I don’t see any possibility for a rise in home prices, especially in cities with large housing inventory, unless the government pushes out another few trillion (in stimulus).”

China Vanke Beijing confirmed that Mr. Mao provided an analysis of the housing market in a private event, but added that there were no official transcripts.

Housing sales fell 7.7% in the first quarter this year, and remained sluggish in April, according to private sector estimates.

There is a glut of homes in China’s second-tier cities and some third- and fourth-tier cities due to oversupply of land, Mr. Mao said, highlighting cities like Tangshan, Shenyang and Wuxi. There is insufficient demand as there are not enough new migrants moving into these cities, and with the rich preferring to buy homes in major cities like Beijing.

Any developer who invests in Tangshan, an industrial city east of Beijing, is walking into a trap, he said.

China Vanke, which has a presence in more than 60 Chinese cities, earlier this weak reported a rare year-on-year slide in net profit in its first quarter results.

Mr. Mao also raised some red flags in tier-one cities such as Beijing and Shanghai as well. While demand from end-users is still strong in such cities, he said, land values — seen as a measure of a potential property bubble — are too high. He said land prices were accelerating faster than housing prices in the capital as a result of government efforts to containing prices of new homes there.

He went on to compare land values in Beijing with those in Japan and Hong Kong just before bubbles in those cities burst.  Tokyo’s total land value in 1990, prior to the property bust there, was equal to 63.3% of U.S. GDP in 1990, he said. During the Hong Kong bubble in 1997, land values there reached 66.3% of U.S. GDP

In 2012, the total land value in Beijing was 61.6% of U.S. GDP, “which is a scary number”, Mr Mao said.

via Leaked Comments From Top Property Developer: China Is Built Out – China Real Time Report – WSJ.

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17/04/2014

Why China Needs to Let More Companies Go Bankrupt – China Real Time Report – WSJ

China needs to let more companies go bust.

That was the message from several executives at a real-estate conference in Shanghai on Thursday, as the latest string of loan defaults among real-estate developers and a small construction firm have some people talking about bankruptcy more freely.

It’s crazy that China hasn’t had a major bankruptcy in recent years, said Ronnie Chan, chairman of Hong Kong-listed property developer Hang Lung Group.

Although the country has a bankruptcy code somewhat similar to that in the U.S., it’s rarely used. Borrowers sometimes flee rather than try to work out problems under bankruptcy law, and there are few judges, administrators or lawyers who specialize in the field.

Last month, property developer Zhejiang Xingrun Real Estate Co. couldn’t repay nearly $600 million of loans. Local officials in Fenghua, the eastern city where the developer is based, are worried that a bankruptcy could hurt the city’s reputation and have said they’ve set up a task force to deal with the outstanding debt and remaining land assets.

On Wednesday, a Shenzhen-listed shipbuilder said property firm Nanjing Fudi Property Developing Co. has failed to repay 105.4 million yuan ($16.9 million) loan, including interest.

While China has seen developers default before, government officials have arranged bailouts for troubled firms that allow their underlying financial problems to fester. On Thursday, analysts argued that authorities have to be willing to address the other option: Let the companies go broke, and send a warning to markets, even if it leads to some financial turmoil in the near term.

Mr. Chan argues that real-estate firms declaring bankruptcy isn’t a social problem. “Another firm takes over the land or project, and no one has to be fired.”

Developers and government officials must be “forced to accept reality,” he said.

To be sure, the developer isn’t saying massive waves of bankruptcies are the way to go either. This is acceptable as long as not too many companies go broke at the same time and doesn’t result too much disruption, Mr. Chan added. In other words, they don’t want a “Lehman Brothers” moment.

“That’s why we prune trees,” said John Allen, chief executive officer of private investment firm Greater China Corporation in a later speech. “Bankruptcy is one of the healthiest things around. You want to get rid of the weak players.”

via Why China Needs to Let More Companies Go Bankrupt – China Real Time Report – WSJ.

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01/12/2012

* Chinese tycoons advised on charity

China Daily: “Western experience sought after to advance China’s development

The newly rich in China are looking to the West for experience again. But this time, they want to learn how to spend money, rather than how to make it.

Zhang Xin, CEO and co-founder of Soho China, a leading real estate developer, said she had no clear strategy when she started her journey into philanthropy.

“In the early days, when I established the Soho China Foundation, we did not have a clear plan. We gave money to build a school here and set up a kindergarten there and rushed to help people affected by a tsunami,” Zhang said.

Zhang said she gradually realized that it is important to discover the pressing social problems China faces and then choose one field that requires a huge investment of money and human capital.

The female billionaire said her foundation started the project Teach for China, which is dedicated to training teachers in rural schools in Northwest China’s Gansu province, one of the most impoverished provinces, six years ago.

“Teach for China is what we learned from an American foundation,” she said.

Zhang made her remarks at the China Philanthropy Forum 2012, which was jointly held on Friday by the China Association for International Friendly Contact, Caijing Magazine and other organizations in Beijing.”

via Tycoons advised on charity |Society |chinadaily.com.cn.

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