You don’t have to look hard to find talk about the Chinese property bubble bursting. When it pops, the property developers will be the first to feel the squeeze. S&P is out with a report on developers.
- S&P says they expect property sales to rise 25-30% in 2011.
- Do not see a material decline in China property sales
- Weakening sales and tight credit could cause a liquidity problem with developers
- Most developers could absorb a 10% sales decline in property sales next year
- Many companies would struggle if sales fell 30%
- Credit is getting tighter for developers
It’s 2012 where the pain could hit and with sales rising so fast, problems are inevitable in a slowdown and something greater than 10% is not a stretch.
It’s China, so it’s always tough to separate the rumors from the truth but either way, this promises to be a major theme in 2012.