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People's Daily Online>>China Business

Anlysts skeptical of skyscrapers' profitability

By Wang Ying (China Daily)

13:35, December 30, 2011

SHANGHAI - More than 200 skyscrapers are under construction across China, but industry analysts are skeptical that these soaring structures will yield financial returns in line with their impressive heights.

The buildings, with a height of more than 152 meters, were on a list released in June by Motiancity.com, China's first skyscraper culture research body.

The list doesn't even include the China Zun in Beijing and the Diamond Tower in Guangzhou. The latter is still seeking more investors before breaking ground, according to a report by the Shanghai-based Daily Economy News.

Each of the 200 skyscrapers will cost 1 billion yuan ($158 million) to 10 billion yuan to build, according to Zhang Hongwei, research director at Shanghai Tong Ce Real Estate Co Ltd.

Continued government property controls are threatening developers' credit lines, and splashing out on skyscrapers whose returns are uncertain could be financial suicide, added Zhang.

A survey by Sina.com's home channel shows that as of June 30, more than one-third of the nation's 189 listed property developers had a debt-to-assets ratio of more than 70 percent.

Separate statistics from Wind Information Co Ltd show that as of the same date, these listed developers' aggregate debt amounted to 1.24 trillion yuan.

Some developers will find it hard to raise the funds to complete some projects on schedule. Others, meanwhile, might look at the volume of new supply coming onto the market and decide to postpone completion until competition is less fierce.

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