Sunac China Holdings Ltd. is buying projects amounting to $2 billion in Beijing and Shanghai following the cool down in the nation's property market. The developer announced on Monday that it will purchase Oceanwide Construction Holdings Co. for 12.6 billion yuan, part of its aggressive debt-fuelled expansion. Company purchase will be paid through company debt and equity.
China International Capital Corp. has forecasted that the housing industry in the world's second-biggest economy is entering a "year of recession". Bloomberg Intelligence reported last month that Sunac's investment is at risk of tighter liquidity and rising funding costs due to its 232 percent net debt-to-equity ratio.
Analysts, however, projected that China's real estate industry will recover in 2009 in its larger cities compared to the smaller ones because of the effect of the caps on shantytown-redevelopment spending. The company currently has a large amount of debt but it also leads other firms in terms of profit growth.
The project that was purchased by the company is located in the Chaoyang district in Beijing. It is mainly focused on residential, commercial, office and hotel sites. The project in Shanghai is located in Huangpu district where residential and commercial developments are to be located.
Michelle Kwok, an HSBC Holdings Plc analyst, noted on his report that national housing sales in China might fall by 10pc this year. She, however, said that the country's residential market is far from entering a severe downturn.
Recently, Sunac went viral after Chairman Sun Hongbin joined the other tycoons who transferred $17 billion of their wealth into family trusts when the country strengthened its tax regime.
The chairman transferred about $4.5 billion on the New Year 's Eve. The chairman's family are beneficiaries of the trust fund. The chairman's wealth more than tripled. The chairman suffered twists and turns in his career which included jail time forced sale a developer in which he worked to be the nation's largest. Currently, Kevin Zheyi Sun, his 27-year-old son, was appointed as Sunac's executive director in May 2017.
The other tycoons on the fund transfer included Chairwoman Wu Yajun of the Longfor Group Holdings Ltd., one of the richest women in China, and the wealthy businessmen behind Dali Foods Group Co. and Zhou Hei Ya International Holdings Co.
According to reports, Sunac's stocks dropped from its 2017 peak as an effect of its failed attempt of offering a lifeline to Leshi Internet Information & Technology, an internet company.
