Web Exclusive

Property developers borrow 510b yuan in '09

By Yu Hongyan (chinadaily.com.cn)
Updated: 2010-03-24 11:20

A total of 67 listed property developers witnessed their net profits rise by 70 percent year-on-year to 28.25 billion yuan in 2009, but their debts surged 34.34 percent to 510 billion yuan ($74.72 billion), the Guangzhou Daily reported today.

Of the 67 developers who had posted their annual reports as of March 23, 14 of them reported a revenue growth of more than 100 percent in 2009, and another 40 saw their gross profits up more than 30 percent. Meanwhile, 32 of the developers said their debt-to-asset ratio exceeded 70 percent.

Property developers had been in rapid expansion since the first half of last year, thanks to the country's loose monetary policy which makes banking credit more accessible. But the moves also led to a surge in debts, said an analyst with the Huatai United Securities.

"It would be safe for a developer if its debt ratio is within 55 percent," said the analyst. "Judging from the current situation, developers with a high debt ratio would be in hard times if the interest rate is raised or the government tightens property policies."

Meanwhile, at least 66 developers have proposed refinancing plans, to raise as much as 150 billion yuan in total.

Developers may be short of funds in the second half of this year, said Yang Hongxu, deputy director of Shanghai-based E-house Real Estate Research Institution. Their refinancing plans are responses to concerns of tightening cash flow.