Chinese real estate companies are expected to come under immense repayment pressure over the next three years, heightening their vulnerability to any market downturns.
The Chinese real estate sector has around 1.8 trillion yuan in bond repayments to make during the period from 2019 to 2021 according to data from Shenzhen Worldunion Properties Consultancy.
This includes 446.4 billion yuan in repayments in 2019 – nearly twice the amount in 2018, followed by 505 billion yuan in repayments in 2020 and 891.8 billion yuan in repayments in 2021.
According to a report from 21st Century Business Herald Chinese real estate companies took on a large volume of costly debt starting from the second half of 2017, as a tightening of financing channels drove a rise in borrowing costs.
An extension in the bank lending cycle also had an impact upon the pace of repayment, which further drove a rise in the debt levels of Chinese real estate firms and undermined their repayment capabilities.
Many real estate companies in China have subsequently taken advantage of a loosening of financing conditions since the end of last year to obtain lower cost funds.
Data from Centaline Real Estate indicates that in March 2019 the financing scope of Chinese real estate companies exceeded 300 billion yuan, for average daily financing of at least 10 billion yuan.