A number of the debt-ridden Chinese property developers are increasing efforts to diversify into asset-light businesses such as commercial real estate and property services in order to lower their reliance on the high-debt, high-turnover model that has caused the sector’s debt crisis, reports Reuters. KWG Group Holdings, CIFI Holdings and state-backed China Resources Land were among developers that listed diversification plans along with their recent financial results.
The diversification moves come even as property companies are targeting asset sales to raise cash for repaying creditors and, according to analysts and developers, will pile cost pressure on the smaller firms.
Chinese developers have for years relied on high-leverage financing to target rapid growth through a build-to-sell quickly model, which worked well until property sales slowed and market liquidity tightened in 2021.
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