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People's Daily Online>>China Business

'Amateurs' exit real estate amid tougher conditions

By  Wei Tian  (China Daily)

13:51, December 08, 2011

BEIJING - More capital is being pulled out of the property market, reflecting tough financing conditions and tightening curbs on the sector, which could lead to the sale of 300 billion yuan ($47 billion) in assets, a report showed.

The latest wave of sales included Hainan Airlines Co Ltd, which transferred its 33 percent interest in an island developer and sold its stakes in other developers. The moves allowed the company to recoup 4.6 billion yuan.

China's fourth-largest white spirits group, Sichuan Swellfun Co Ltd, said that it would divest property assets worth 530 million yuan and deregister a subordinate developer, because of the "uncertainties in the property market". Real estate once contributed one-third of the distiller's annual revenue.

"The company will focus on its core business and will no longer set foot in the property market," Zhang Zongjun, secretary of the board, told the China Economic Times.

In sharp contrast to 2008, when businesses flocked into the booming property market, 16 listed companies whose core business is not real estate have this year reduced or withdrawn their assets allocated to property.

"If regulation of the property market continues for another three to six months, the total assets and equity sold just by those non-real estate enterprises may exceed 300 billion yuan," Zhang Dawei, head of Centaline Property Agency Ltd's research department, was quoted by Beijing Business Today as saying.

Zhang's scenario appears realistic as the government is sticking with its property curbs despite price declines.

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