Bubble Fears in China’s Real Estate due to Bond Frenzy

Chinese property companies are rushing to the dollar bond market, almost matching last year’s sales in the first month of 2013 alone, in a frenzy that could inflate the sector’s gearing and the broader risk of a housing price bubble.

In a highly competitive sector where even the biggest developers have market shares of just low single digits, nobody wants to get left behind building up cash as optimism grows that a recovering Chinese economy will boost housing prices.

And with foreign investors desperate for the yields on offer, developers can’t match demand and their funding costs are falling.


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