Land grab

16 September 2020 By Yawen Chen Follow @ywchen1

Unwritten credit rules circulated by Beijing have prompted the $29 bln property developer to offer discounts of 30% or more. That will eat further into profit and make it harder to cut debt. The aggressive gambit by Chairman Hui Ka Yan may, however, cripple the competition.

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Real estate developer China Evergrande on Sept. 6 announced internally a nationwide discount of about 30% on all its properties until the end of the week-long holidays in early October, a period that is traditionally China’s peak home buying season, Reuters reported on Sept. 10.

In early September, Beijing circulated so-called “red-line” policies to reduce leverage in the real estate market, according to people familiar with the matter. One would force developers to have enough cash to cover short-term debt. Another would require their debt-to-asset ratios, excluding advance payments, to remain below 70%.

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