It's no longer about whether developers can get loans from the banks. In fact, developers are no longer allowed to pay their land premiums with domestic bank loans.

Where once they could pay in instalments over several years, now they are asked to settle the bill in three to six months. And to even take part in a land auction, they must show proof that their bank accounts are stuffed with cash.

Once it was all about bribes and guanxi. Today, cash rules.

The sale of Sunco China, once a high flyer in the industry, to Hong Kong-listed Road King shows what can happen to the unprepared. Sunco had no other way to escape its financial troubles. 'Anyone who believes the tightening will be over in a few months is toast,' said a developer in northern China.

As always, the privately owned developers have reacted the most nimbly. Take Agile Property, a Guangdong-based developer that is sitting comfortably on almost 10 billion yuan thanks to a two-pronged fund-raising exercise - a share placement and a bond sale.

Though private developers have been paying interest rates of 6 per cent and above at home, an 8 to 9 per cent long-term dollar bond is still attractive if you believe the yuan will appreciate.

Awash with cash and bullish on Chinese real estate, hedge funds and bond funds are snapping up developers' paper. Agile's bond deal in September was two times oversubscribed; this week's lower coupon sale by Shimao was eight times oversubscribed.

Such windfalls are not for everyone, though. Private developers such as Shanghai Forte and Guangzhou R&F miss out because they are H-share companies.

Mainland authorities, including the National Development and Reform Commission and the State Administration of Foreign Exchange, have barred them from issuing high-yield bonds, fearing that dollar-denominated paper will only intensify pressure on the yuan to appreciate.

For such companies, the only alternative is a share placement. This, however, means settling for far less money than they could make from a bond sale.

Yet compared to their mainland-listed or unlisted rivals, the H-share companies are laughing. The regulatory hurdles to raising money on the domestic market are too high for all but those that have a 'state mission' - Beijing North Star, for instance, which is a contractor for the 2008 Beijing Olympics. Even major players such as China Vanke are frustrated. It has yet to complete its two billion yuan private placement plan four months after announcing it.

A Darwinian struggle for capital is under way. The fear of being eaten alive or starving to death in the ice age will push more mainland developers into Hong Kong's capital market.

Among them could be Greentown and Shimao, whose promises to refrain from share placements for six months after their initial public offerings will expire at the end of next month. There are also the state-owned developers such as Guangzhou Investment which lag their private sector rivals when it comes to stuffing their pockets.

Unlisted companies are struggling to be listed in Hong Kong either as companies or real estate investment trusts.

In order to reignite investor interest, some reits will come bearing better terms than before, offering up their prime properties and giving investors first right of refusal on future asset injections.

So, enjoy the recent ride of real estate stocks but don't forget there will be more supply in the pipeline.

CASH CALLS

Fund raising by privately owned mainland developers

Land reserve gross floor area (m sq metres) Cash on hand (B yuan) Amount raised (HK$b)*

Greentown 4.8 0.922 5.7 (bond and public offering)

Shimao 5.3 1.207 8.36 (bond and public offering)

Agile 8.3 2.749 6.22 (placement and bond)

Hopson 13.59 1.086 0.98 (placement and senior notes)

Shanghai Forte (H) 5.55 1.826 0.688 (placement)

Guangzhou R&F (H) 11.07 2,359 1.59 billion (placement)

Fund-raising exercise by state-owned mainland developers

China Overseas 12.55 3.75 1.8 (parent?s exercise of warrants)

Guangzhou Investment Not available 2.40 ?

Beijing North Star Not available 2.429 3.6 billion yuan (A-share issue)

China Resources Land 3.92 2.90 ?

Beijing Capital 4.77 1.08 1.0 (placement)

* Fund-raising exercises after June 30

H denotes H-share company

Source: Companies