Shanghai developer said to halt project on funding shortage

PUBLISHED : Saturday, 28 June, 2014, 1:07am
UPDATED : Saturday, 28 June, 2014, 1:07am

A closely held Shanghai developer has suspended construction at a property project due to a lack of funds, according to government officials familiar with the matter.

Construction at Shanghai Yuehe Real Estate's mixed-use project, including residential, office and retail space, was halted this month and the project was frozen by a court, according to the people.

Shanghai Pudong Development Bank lent about 240 million yuan (HK$299 million) to the 220,000 square metre development in suburban Jiading district, they said.

"There will be more developers having troubles," said Duan Feiqin, a Shenzhen-based property analyst at China Merchants Securities. "Many Chinese cities face oversupply of those mixed-use property projects amid the e-commerce boom, while a lot of developers, especially those small ones, are not capable of doing such developments."

Yuehe is the latest example of mainland developers facing pressure as the slowing property market weighs on the growth of the economy. Moody's Investors Service in May revised its credit outlook for Chinese developers to negative from stable.

Premier Li Keqiang has sought to rein in credit expansion and he must balance such steps with efforts to meet a 7.5 per cent economic growth target, the slowest since 1999.