China’s monetary tightening and restrictions on housing purchases have triggered a shakeout in the real estate industry, allowing leading players to expand their footprint at the expense of smaller firms, the Financial Times reported. The biggest listed firms increased their market share from 9% to 12% last year, and the trend is continuing this year, says Callum Bramah, head of Asian property research at Macquarie Securities. A major differentiator in recent months has been access to financing, with small developers paying as much as 20-30% annualized interest to private lenders to obtain working capital. Large listed firms like Longfor (0960.HK) and Evergrande (3333.HK), meanwhile, have been able to issue bonds in Hong Kong with coupon rates of about 10%, while state-owned firms like China Overseas Land & Investment (0688.HK) and China Resources Land (1109.HK) are still able to obtain loans with rates as low as 3%.
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