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Most real estate firms are actively seeking financing, but progress remains inconsistent, and borrowing costs stay elevated, industry experts say. The majority of developers able to secure funding are either state-owned companies with stable revenue streams and strong backing or private firms holding operational assets. These funds are primarily used for reinvesting in ongoing projects or paying down existing debts to prevent defaults.
Since the start of the year, real estate companies have accelerated their efforts to raise capital through various channels, including rights issues and private placements for publicly listed companies, as well as issuing high-interest foreign bonds for private entities.
For instance, a state-owned property company recently announced plans for a private placement to raise up to 3 billion Chinese yuan (around $434 million), aimed at supporting several residential development projects. The issuance will be priced no lower than 80% of the average trading price over the 20 days prior to the offering.
Another firm announced it intends to sell 198 million shares at HKD2.39 (about 30 US cents) per share—about 15% below the previous day’s closing price—seeking to raise approximately HKD469 million (roughly $60 million). The funds are designated for future expansion, repaying maturing debt, and general operational needs.
A major developer returned to the offshore bond market after three years, issuing a USD360 million bond with a coupon rate of 12.75% on January 30. Part of the proceeds was used to buy back existing bonds. Industry analysts note that the high coupon rate, significantly above the average of 4.33% seen in similar Chinese property bond offerings last year, indicates a hefty risk premium. This move likely attracted high-risk investors rather than traditional, long-term bondholders.
Despite these efforts, the overall funding environment for China’s real estate sector remains fragile. In December, the combined financing volume of the top 65 major property companies reached just 24.1 billion yuan (approximately $3.5 billion), bringing the total for the year to a record low of 414.3 billion yuan (around $59.9 billion), according to industry data.
Experts say the sector is still undergoing significant rebalancing. Financial institutions continue to exhibit high risk aversion, remaining cautious about property-related investments. This mindset suggests that meaningful improvements to the financing landscape are unlikely in the near future.
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