THE risk of insolvency to property developers under the current economic clampdown is not high because most are state-owned, a Guangdong official in charge of the real estate sector says. Chen Zhiquan, deputy director of the Construction Commission, admitted the credit-tightening policy had some impact on the property sector, but said Guangdong would not go so far as to suffocate the healthy development of the industry. He said: ''A certain degree of control in the real estate sector is necessary to ensure that there are sufficient funds and materials for key infrastructure projects in transport, energy, telecommunication. ''However, the control cannot be too tight so as to suffocate the normal development of the real estate sector, because many related sectors would also be hurt and the whole economy would be adversely affected.'' Construction Commission figures show that in the first six months, 16.1 billion yuan (officially about HK$21.6 billion) was invested in the Guangdong real estate sector, up 40 per cent over the same period last year. The average price was 1,600 yuan per square metre, lower than last year if inflation is factored in. Mr Chen said the Guangdong real estate market could withstand the credit curbs. ''Following the past years of rapid development, the real estate companies have become quite strong in their financial position. They have higher proportion of flowing capital for coping with the credit crunch,'' he said. In addition, there were more foreign investors who were less vulnerable to domestic policy in Guangdong than in other provinces, he said. Mr Chen said developers who borrowed funds in the market might be slightly affected by the government's policy, but they could adopt different methods to solve their problems. For example, those with huge land banks could co-operate with others who had funds to continue development projects.
