People learn about properties at a real estate sales office in Beijing on June 24, 2023. Photo: VCG

Vanke, one of China's major property developers, said on Friday that the support of the state asset regulator in Shenzhen, South China's Guangdong Province will help it release liquidity of more than 10 billion yuan ($1.38 billion).

Experts noted on Sunday that as China is increasing support for the real estate sector, the domestic property market will remain stable and many industry indicators should turn from negative to positive, and the market will also be boosted by the continuous economy recovery.

On Friday, Vanke made a number of replies on the interactive platform of the Shenzhen Stock Exchange, responding to topics such as the specific funding arrangements for offshore bonds due in May and June, the government's support, and the temporary suspension of dividends.

In response to the Shenzhen government's support measures, the developer said that the Shenzhen State-owned Assets Supervision and Management Commission had coordinated with a number of state-owned enterprises to communicate with the company and promote the implementation of specific support measures, including helping it dispose of real estate and illiquid long-term equity investments, as well as coordinating financial resources to support the company.

Vanke said that some of these measures have been completed, some have been paid, and others are in process. When all the measures are completed, they are expected to help the company release liquidity of 10 billion yuan or more.

"The government's support will help improve the cash flow of the enterprise and further ease its financial pressure to resolve some of the current debt issues," Yan Yuejin, research director at the Shanghai-based E-house China R&D Institute, told the Global Times on Sunday.

Since late October, the prices of Vanke's US dollar-denominated bonds have continued to fall, with the value of many dropping by 40 percent. In November, Shenzhen's state asset regulator issued a statement on behalf of Vanke, promising to use all possible legal and market-oriented means to help the firm if necessary.

It is one of the country's efforts to help property companies alleviate liquidity pressure. China has established provincial-level real estate financing coordination mechanisms in 31 provincial-level regions and in the Xinjiang Production and Construction Corps, and city-level real estate financing coordination mechanisms in all cities at the prefecture level and above, the Ministry of Housing and Urban-Rural Development said on Wednesday.

As of the end of March, 1,979 property projects had obtained bank credit of about 469 billion yuan, and some 1,247 projects had received loans worth more than 155.4 billion yuan, according to the ministry.

China announced in January a plan to establish a financing coordination mechanism for the real estate sector with the aim of meeting the legitimate financing needs of property projects and supporting the stable and sound growth of the market.

Yan noted that due to government support, a number of developers have accelerated housing sales and further ensured the delivery of buildings. 

"The housing sector has shown more positive signs and will regain momentum in the medium to long term," Yan said. 

After years of adjustment, most of the real estate risks have been resolved. This year, the structural adjustment of the housing sector should be basically completed, and next year it will usher in a resumption of growth. The stabilization of home prices will be a great help to the recovery of consumer confidence as well as a rebound in consumption, Tian Yun, a Beijing-based economist, told the Global Times on Sunday.

Global Times