Economics
China Developers' Funding Source at Risk in Sales Crackdown
- Guangdong may scrap pre-sales to limit property speculation
- Developers already squeezed by bond sale, shadow banking curbs
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China’s debt-laden developers face a potentially devastating blow to their biggest source of financing, as authorities consider putting an end to the practice of selling apartments before they are finished.
Guangdong’s provincial housing authority is considering scrapping so-called pre-sales, according to a document seen by Bloomberg News. The system allows developers to receive the entire sale proceeds upfront before construction has finished, which they then use to finance further land purchases and developments.