Chinese authorities are reportedly planning to set up a real estate fund, in the midst of an ongoing mortgage boycott against unfinished homes.
A real estate fund as large as 300 billion yuan ($44.4 billion) is in the works, according to a report by financial information provider «REDD» citing unnamed sources, as Chinese authorities seek to support property markets.
50 billion yuan of funding was secured from China Construction Bank alongside a 30 billion yuan relenting facility from the People’s Bank of China. The fund can also be upside to between 200 to 300 billion yuan. 12 developers and a few new distressed real estate firms were nominated by local authorities to receive support.
The fund can be used to buy financial products issued by the developers or finance state buyers' acquisitions of their projects.
Property Troubles
Meanwhile, China is grappling with ongoing property troubles from a mortgage boycott in the mainland over unfinished housing projects.
While there are concerns about risks from a fallout such as lending hesitancy to certain sectors and additional pressures to China’s economic slowdown, others are more sanguine.
According to a research report by DBS, China’s financial system can absorb an estimated loan loss of 7.5 trillion yuan before triggering systematic risk, compared to the 1.1 trillion yuan of total mortgage value involved in the crisis.
