More small Chinese property developers have declared bankruptcy due to the cooling measures aimed at curbing house prices in the country, according to The Business Times.
Unable to pay back debt, Guangdong-based Guangdeye Property Development has filed for bankruptcy, following the failure of two property developers in Hangzhou — Hangzhou Glory Real Estate and Hangzhou Jinxiu Real Estate.
With about 60,000 developers in the country, analysts expect more bankruptcies among unlisted companies, which will likely benefit the large, listed and geographically-diverse firms such as Evergrande Real Estate and China Vanke.
Du Jinsong, China property analyst at Credit Suisse predicts that bankruptcies could spread to other cities.
Despite the bankruptcies, long-term prospects for property demand in China remains bright.
“A strong projected economic growth as well as stable employment in China will help sustain mid- to long-term property demand,” said Lorraine Tan, Director of Equity Research at S&P Capital IQ.
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