Government should let market decide, says chairman of property company
One of the country's top private property developers has slammed a new People's Bank of China lending policy that tightens the rein on the real estate market. Officials issued the policy without adequate public consultation, says Pan Shiyi.
Mr Pan, chairman of Beijing-based Soho China Ltd, said the policy - introduced early last month shortly after the chairman of Shanghai Land, Chau Ching-ngai, was detained in Shanghai - 'was issued in haste and will 100 per cent impact' the real estate market on the mainland.
The policy restricts lending to developers and attempts to regulate the messy and often corrupt relationship between banks and developers. Mr Pan said he supports in principle the policy of regulating banking lending but finds fault with two aspects that limit lending to those consumers who buy 'finished' residential or commercial properties.
Short of funds and hindered by a state banking sector that still gives preferential treatment to state-owned enterprises, most private developers pre-sell properties well before they are completed. Many rely on buyers putting up a 30 per cent down-payment on yet-to-be completed properties, with banks lending the remaining 70 per cent as part of the financing process.
'Most private developers in China are not listed companies,' Mr Pan said.
Though more than a dozen property developers have listed on mainland markets, they are all state-owned, since regulators still give state-owned firms preferential treatment.