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Chinese and foreign banks in Shanghai made house development loans of CNY 6.7 billion, CNY 2.8 billion, CNY 4.8 billion, CNY 6.3 billion, CNY 6.4 billion and CNY 4.2 billion in each of the first six months this year.
The official statistics show that Shanghai's balance of real estate development loans slid about CNY 130 million in June, compared to that in May. The month-on-month decrease accelerated in July to hit CNY 2.52 billion. The balance of house development loans dropped CNY 370 million at the end of June but added by CNY 89 million in July.
Meanwhile, business property development loans surged CNY 2.08 billion month on month in June but slid CNY 440 million in July.
The central bank's report on August monetary credit conditions showed that Chinese financial institutions' loans put into real estate industry dropped CNY 4.62 billion in the month than those in the previous month while foreign banks' such loans added by CNY 1.04 billion.
Real estate developers currently have less dependence on bank loans as they are turning to other financing channels emerged such as bonds, private equity funds and trust and some large players put more own capital into real estate development.
At present real estate developers are harder to get bank loans. Even some could get the loans, but they had to pay more interests. Commercial banks this year have raised the interest rate on real estate development loans by 10-20 percent on average, and they only asked for benchmark rates for quality clients.
In such an environment, some real estate developers are worried about future loans, so they got loans now and then re- loan to others.
Banks also pinch consign loans. When a company or parent company ask for loans for connected companies or member companies, banks usually ask the borrower to have covered at least 35 percent of the real estate investment with own resources and the projects have been granted four certificates.
In addition, relatively higher requirements are set in other financial channels. Many real estate developers financed with trust companies but the latter usually prefer to providing financing service to good-performing players on capital security concern. When financing with a trust company, a real estate developer needs pledge certain property at 70 percent of the property value.
Local banking regulatory in Shanghai this July asked commercial banks to give priority consideration into quality real estate developers' financing needs on the basis on of risk control and support local residents' mortgage loans for individual residence improvement purpose. These are aimed to boost the consecutive and reasonable growth of real estate industry and endure credit security.
(USD 1 = CNY 6.85)
From www.nanfangdaily.com.cn, Page 1, Monday, September 15, 2008 info@SinoCast.com
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