Shanghai: China’s Sundy Land Investment Co said on Wednesday it plans to raise 1.5 billion yuan ($250 million), a sign that a ban on refinancing by listed developers has been quietly lifted as the government looks to ease its grip on the property sector.
Sundy plans a private placement of 312.5 million new yuan-denominated shares to fund two housing projects in the eastern Chinese cities of Nanjing and Hangzhou, it said in a filing to the Shanghai Stock Exchange.
China’s property sector has continued growing even as the broader economy slows, and the government has had to tread a fine line between trying to control rising home prices while simultaneously sustaining the sector’s contribution to the economy.
Since July a handful of real estate firms have announced refinancing plans, but Sundy is the first to say that proceeds will be used for developing housing projects.
“The recent developments have given clear signs that a ban on property firms’ refinancing has quietly been lifted,” said Zheng Weigang, head of investment banking at Shanghai Securities.
“These developments are also part of a government’s relaxation of a sweeping clampdown on the property sector in place over the past few years.” China has suspended refinancing by listed property firms since August 2009 as part of its attempts to control surging prices that are putting homes beyond the reach of average wage earners, raising the potential for social unrest.
The last such refinancing was Gemdale Corp’s placement to raise 4.2 billion yuan in 2009.
Speculation of looser controls has picked up in recent weeks amid increasing signs of a sharp slowdown in growth in the world’s second-largest economy. Property investment is one of the pillars of the economy.
China’s politburo, the country’s top decision-making body, did not mention a continuation of cooling steps on the property sector in a meeting about the economy held in late July, instead pledging to keep growth stable in the second half by fine-tuning policies.
Markets interpreted those comments to mean that there would be no further measures to cool the property market.
The pace of China’s month-on-month home price rises edged down slightly for a third straight month in June though the year-on-year gains were the strongest this year, data showed last month.