Skip to content
cropped logo no background e1665426074830

DayZspain Business and Finance

Research on Business and Finance

Could Evergrande Impact Global Property Prices?

Posted on January 3, 2023 By
Finance

China’s crackdown on property developers threatens the London property market.

How the chinese property collapse could affect  property prices in rest of the world and in london   in particular. the biggest chinese developers  don’t just build in china, many have developments   all around the world so in today’s piece we will  discuss their international investments and how   as i’m sure most of you

Know, evergrande   is chinas second largest property developer and  the world’s most indebted real estate developer.   they have been all over the news recently, having  sparked fears across global markets two weeks   payment deadline on their offshore debts.   this wasn’t classified as a default as there is a  30

Day grace period on that coupon payment. then,   last week, another smaller chinese developer,  fantasia, defaulted on an offshore bond,   and more troublingly we learned that fantasia  also defaulted on a $100 million dollar loan to   country garden – which is chinas largest property  developer. the fact that these struggling

Real   estate companies are lending to each other makes  contagion within the industry more of a risk.  excessive leverage in the chinese economy,   and chinese regulators have been trying to   reduce the economy’s overreliance on debt. their  main approach has been to implement the “three   the three red lines

Were hard limits on  the new policy meant that – not only could these  developers no longer borrow any additional funds,   but they were actually required to quickly pay  down their debts. this required them to sell   assets often at fire sale prices. this of course  caused a spiral, as the losses on those sales   only made

Their debt ratios look worse, putting  further pressure on them to deleverage further.   that’s struggling the most, but the pain   being inflicted by the three red lines on chinese  it would now appear that these problems  among chinese property developers could   according to the ft a uk property consultant  claims to

Have been contacted by a uk regulator   with concerns about the risks of contagion in  london. “the big question is whether the chinese   “that would be a pretty big crisis in the uk   the london residential real estate  and high-end apartment prices in central london  are down around 22% since the summer of 2014.  

There has been political uncertainty due to  three general elections over that time period,   pandemic – and the move to working from home  has not helped urban property prices anywhere.  over that period a lot of chinese money poured  into london real estate, with the deal value   having peaked in 2017. so far this year there 

Has been no chinese investment in central london   according to real capital analytics. and this  of course makes sense, as these developers are   not going to expand internationally when they are  under pressure from beijing to cut their leverage.  that period? well, in 2014, greenland group   a chinese property developer

Announced that they  would build europe’s tallest residential tower   in canary wharf. they paid 84 million pounds (or  around $115 million) for the plot of land. they   laid the foundation for the building, but all  construction came to a halt shortly thereafter.  by sales, bought a site in east london,   for £80m –

A bit over $100 million back in 2018,  with plans to create a £400m development of almost   r&f properties in 2017, paid close to 500   million pounds (or 700 million dollars) for a site  in nine elms, in south-west london, which remains   unfinished. the developers claim that beijing’s  crackdown will have no effect on

The development,   and that their projects are fully financed.   according to a london based property developer,  the stresses these developers are experiencing   to reduce their leverage or down to a weak   that before the recent turmoil in china, most   chinese developers that began building in the uk  had fairly

Disastrous results. they paid an awful   lot for the land, struggled with construction  this is only so much of a surprise. you see  this all the time in almost every industry   where a company has been very successful in their  home market and assumes that they will be equally   successful in a very different foreign market, 

See also  My Plan for The Stock Market The Next 30 Days

Only to find that conditions there are quite   developers consistently outbid english property  developers for real estate projects in london,   for all their inexperience they nonetheless   understand the london housing market far better  than the locals do, or that they are overpaying.   they could be overpaying because conditions

In  their home market allow them to ignore profit   considerations in favor of prestige. we saw this  in the 1980’s with japanese property investors   overpaying for trophy assets abroad. japanese  investors bought the empire state building for   a number of uk developers have described being   constantly outbid by chinese

Developers in land  sales between 2013 and 2018, saying that if you   were up against a chinese developer, you knew it  was inevitable that you wouldn’t get the site”.  as the challenges have mounted in london, and  apartment prices have fallen, chinese investment   tailed off dramatically. the pressing question   greenland

– Who are building the spire building  in canary wharf insist that they have no plans   take the development forward as a high-quality,   they do say that they are considering  scheme, a residential development on the  they are allegedly in conversation with “four or  five potential bidders” and close to exchanging  

Contracts with one for the portion of the site  that is yet to be built. greenland say that any   earlier on i quoted a uk property consultant  who said that the chinese restricting investment   uk and elsewhere. this is not necessarily true.  foreign direct investment is based on the   country is always constrained by a shortage

Of   capital. that is why when foreigners promise to  invest in a country, it is assumed that this will   circumstances. under other circumstances,  what matters are the underlying  so, while chinese investment can cause developing  economies to grow faster, it is less likely   in a situation where capital is a scarce

Resource   because countries like the uk don’t suffer from   a scarcity of investible capital, the benefits  foreign direct investment helps grow an economy  if capital is scarce, if technology is scarce and   not figured out how to invest profitably,   the country receiving the investment needs   if chinese

Developers stopped buying up sites in   the uk to develop, this shouldn’t really cause an  economic crisis for the country, it would really   only be bad for people who own these assets and  are hoping to offload them to foreign investors   right now, the main effect of chinese developers   being forced to deleverage

Is that they might  be forced to dump their international assets,   and can actually be sold. often in a crisis,   investors dump their highest quality assets first,  for no reason other than that these are the only   ones that can be sold, they find themselves left  holding the most toxic assets that were causing  

The pain to begin with. as i mentioned earlier  central london real estate is down over 20%   international investors are not doing very  well on their london real estate investments.  feeling as much pain as you might expect,   simply because the low interest rate environment  means that their mortgage payments have been  

Even if their home has fallen in value, their   loss is offset by the fact that their monthly  mortgage payment has been significantly lower   the same period. the real question is how will   if you found this video interesting, check out my  piece from a few days ago on the fantasia default,   and might be a sign of contagion in the  

Transcribed from video
Could Evergrande Impact Global Property Prices? By Patrick BoyleliveBroadcastDetails{isLiveNowfalsestartTimestamp2021-10-11T213009+0000endTimestamp2021-10-11T214322+0000}

Post navigation

❮ Previous Post: FACEBOOK STOCK DOWN BIG on (Cambridge Analytica Scandal)
Next Post: Stock Market For Beginners HUGE MISTAKES I Made ❯

You may also like

cathie wood is in deep trouble
Finance
Cathie Wood is in Deep Trouble
October 15, 2022
12 things i no longer spend mone
Finance
12 Things I No Longer Spend Money On In My 30s
January 17, 2023
aurora cannabis acb invests 0 mi
Finance
Aurora Cannabis (ACB) Invests 0 Million into Enwave Corporation (TSXV: ENW)
December 7, 2022
taat 17 trademark applications f
Finance
TAAT 17 TRADEMARK APPLICATIONS FILED IN 15 JURISDICTIONS
March 18, 2023

Recent Posts

  • 5 Biggest Myths about being a Youtuber!
  • TAAT(TM) Now Selling in Tobacco Retailers Throughout Greater London Billboard Campaign
  • FOREX TRADING ACADEMY
  • What Is A Bond? BONDS FOR BEGINNERS!
  • Where Should I Invest My Money? How to Invest in Stock Market India? Vishal Thakkar

Recent Comments

No comments to show.

Archives

  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022

Categories

  • Finance

Copyright © 2023 DayZspain Business and Finance.

Theme: Oceanly News Dark by ScriptsTown