Two more property developers in Guangdong and Hangzhou have filed for bankruptcy, highlighting the growing pressure on cash-strapped small players that are struggling amid Beijing's efforts to cool the housing market.
Guangdeye Property Development in Shunde, southern Guangdong, declared bankruptcy on Wednesday due to its inability to repay debt, according to the People's Court in Shunde.
The private firm has not undertaken new projects since completing a commercial project, Shunde Commercial City, in 2008, when it reportedly started encountering financial difficulties.
Over in Hangzhou, Hangzhou Jinxiu Real Estate, which was developing a luxury serviced-apartment project on the West Lake, has reportedly filed for bankruptcy. It comes a week after the collapse of Hangzhou Glory Real Estate, says Hangzhou's news website, zjol.com. The firm was unavailable for comment.
David Ng, a property analyst at Macquarie Equities Research, believes more small players would fold if the property downturn persists.
'The polarisation trend between small and big developers will become obvious, given major players' easier access to bank loans and their ability to offer big discounts to speed up property sales,' Ng said.
Smaller developers, particularly those with just one project on hand, would find it hard to survive if they fail to generate cash flow from property sales, he said.