China property developers hoard cash

The mainland's biggest property developers are sitting on US$25 billion in cash as they prepare for a possible credit crunch and another round of crackdowns on real estate speculation.

Companies including Shimao Property Holdings and Greentown China Holdings raised more than US$16 billion in offshore bonds and loans over the first eight months of this year - about 36 per cent more than in all of last year. But they have turned more cautious about investing, leaving much of that money on their balance sheets.

The mainland's property sector is a pillar of growth in the world's second-biggest economy, accounting for 15 per cent of the gross domestic product in the first half of the year. Data released on Wednesday showed new home prices last month rose at the fastest pace in 21/2 years, strengthening the case for government cooling measures.

Reuters has analysed data on 76 Chinese property developers that reported results for the quarter to June 30, and found that while cash and short-term investments spiked, their spending plans were more conservative.

Thomson Reuters StarMine SmartEstimate data shows real estate management and development companies' total capital expenditures are expected to fall 11 per cent in the next 12 months, a sharp contrast with peers in the broader Asia-Pacific region where spending is forecast to rise 6.6 per cent.

Developers have curtailed capital spending as the US Federal Reserve's widely expected tapering of bond purchases - which has been postponed - drives up global interest rates.