Property developers and agents are feeling the pinch as credit tightens and the real estate market weakens on the mainland, Ming Pao Daily reported Tuesday.
Shih Wing-ching, founder of Hong Kong-based Centaline Group, was quoted as saying that the company has over 2 billion yuan (US$324.7 million) in commissions receivable on its books, with half of the total overdue as a result of tighter cash flow among its mainland property customers.
Some developers use sales revenue or payments from mortgage loans to cover construction outlays or repay debt. Most of the commissions due to agents have been in arrears for two to four months, Shi said.
Yuzhou Properties (01628.HK) said the company failed to recover sales revenue in some third- or fourth-tier cities as more banks stopped mortgages or delayed lending, according to the report.
Yuzhou said the cash flow problems confronting mainland property developers won’t ease any time soon.
To give the property market a lift, the People’s Bank of China has urged commercial banks to speed up lending to first-home buyers and set lending rates at a reasonable level. But analysts say the effects will be limited unless the central bank reduces banks’ required reserved ratio.
Banks prefer to lend to other sectors other than the property mortgage market because of the thin profits.
According to research house Rong360, around 20 percent of banks in Beijing, Shenzhen and Chongqing had stopped offering mortgages by April.
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