Regulatory curbs ‘squeezing Asian property developers’: S&P

November 1, 2013 Leave a comment

Regulatory curbs ‘squeezing Asian developers’: S&P

THE NATION October 31, 2013 1:00 am

STRINGENT regulations will continue to restrain Asian real-estate developers including those in mainland China, Hong Kong and Singapore, Standard & Poor’s Ratings Services said in a new report titled “Asia-Pacific Credit Trends 2014: Real Estate Developers Wrestle with Regulatory Curbs; REITs Hunt for M&As”. S&P expects the credit outlooks for the real estate investment trust (REIT) and property development sectors in the Asia-Pacific region to be largely stable in 2014. Some markets in the real-estate development sector are likely to perform worse than this year, though.“We expect the regulatory policy impact on China’s real-estate sector to be neutral. Nevertheless, we may see some moderation in the performance of China’s real-estate developers in 2014, compared [with] the sector’s strong results this year,” said Standard & Poor’s credit analyst Bei Fu.

“Hong Kong, on the other hand, is likely to face a tough time. Harsh regulatory measures are squeezing demand, spurring price cuts from leading Hong Kong developers that could compress margins across the sector.”
Singapore too faces a strict regulatory environment. S&P believes stringent regulatory policies and an increased supply of public housing will temper private-sector demand in the near term.
“In the Asia-Pacific real estate investment trust sector, buyers are bidding up asset values not off the back of rising rentals but because they see good buying opportunities. The region’s real-estate sector is attracting substantial investments from pension and sovereign wealth funds,” said credit analyst Craig Parker. “The offshore capital providers have long-term investment horizons aligned with the REITs’ strategies, and bring sizeable balance sheets to fund future growth.”

Filed under Macro Trends

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