Some small Chinese developers will not survive until the end of the year because the government's property tightening will deprive them of cash, giving bigger players a chance to buy their assets, Fitch Ratings said on Thursday.
However, any concern about a real estate crash in China was unwarranted as most developers still held sufficient cash to get through the next 12 months, said Ying Wang, a Chinese property analyst at Fitch.
Surely some will collapse, but those listed in Hong Kong still have sufficient cash and stable liquidity after bumper sales revenue last year, she said. We don't have to be too pessimistic.
China has virtually halted domestic public listings of developers and has also ordered banks to curtail lending to them, but big state-owned developers such as Poly Real Estate Group Co Ltd could still get loans, Wang said.
At the same time, a growing number of Hong Kong-listed developers such Evergrande Real Estate group Ltd are issuing offshore yuan bonds to raise cash.
Small homebuilders, however, rely largely on private loans and trust funds. They will have to sell assets, including land acquired at cheap prices, to bigger rivals if they are unable to raise enough funds for development, Wang said.
China has repeatedly intensified efforts to rein in excessive housing price rises since late 2009, with the latest round of tightening launched in January.
Transactions will fall, yet property prices will remain stable with upside risks, particularly in the country's top cities, Wang said.
Market demand is still there, she said. It will be released in the medium and long term, though it is being supressed temporarily.
The National Bureau of Statistics will on Friday publish data showing last month's property price inflation in China's major cities.