China Posts Surge in Non-performing Real Estate Loans

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A new survey sees surging growth in the non-performing loans of China’s real estate sector in 2018. 

An annual market survey of China’s non-performing financial assets from China Orient Asset Management found that respondents expect the balance of non-performing real estate loans to hit 85.5 billion yuan (approx. USD$13.59 billion) by the end of 2018.

30.3% of survey respondents said that the real estate sector will see the largest increase in NPL in 2018, as compared to 32.8% who said that it would be the manufacturing sector.

According to the report the scale of NPL in China’s real estate sector has expanded rapidly since 2013, hitting a growth peak of 73% in 2015.

The report forecasts growth in real estate NPL of 20% in 2018, as the overall non-performing ratio hits 1.5%.

China’s banking regulator warned of strong pressure behind non-performing loans in March, while in December Lai Xiaoming (赖小民), chairman of China Huarong Asset Management, said that the total volume of China’s non-performing loans is set to rise to 3 trillion yuan by 2020 based on current growth rates.

 

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