[photopress:property_land.jpg,full,alignright]The China Securities Regulatory Commission has stressed again that a real estate developer cannot use the fund-raising from its initial public offering to buy lands for real estate development as well as hoard land reserves and properties.
An executive at a property company that is seeking regulatory approval for an IPO said that if a real estate developer mentions such purpose in the IPO application, it will be refused.
Industry analysts said the result of this is listed real estate developers now need to pay more attention before they rush to buy land, which used to be a major driver to their share prices.
Zhang Yuliang, chairman of Greenland Construction said the reminder from the commission is substantially an encouragement to quality real estate developers that are expecting to list in the domestic A-share stock market. He said the restriction would not affect Greenland, the largest real estate developer in Shanghai.
However, an analyst at a consulting services provider in Shanghai, said the issuing of the reminder will impact the market sentiment to a certain extent. Some real estate developers will have to slow the IPO applications and rewrite their applications to meet the requirement.
And perhaps the issuance of the reminder signals a substantial change in CSRC’s attitude toward supervision on the domestic real estate industry and a change in appraisal standard for listed real estate developers, which used to be closely linked to their land reserves.
An UBS analyst earlier said the situation that investors last year chased by listed real estate developers with affluent land reserves will change in 2008. And the prediction was made that real estate developers in second- and third-tier cities would continue to seize land reserves.
Source: Trading Markets