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Shanty town redevelopment may cool down on CDB's policy change

iconJun 26, 2018 16:03
Source:SMM
Boom of shanty town redevelopment in China may cool down

SHANGHAI, Jun 26 (SMM) – The boom of shanty town redevelopment in China may cool down after China Development Bank (CDB) took away the local approval authority on renovation projects.

Share prices of Chinese real estate developers tumbled on Monday June 25 following market talk that Beijing planned to ban shanty town redevelopment altogether and that CDB would stop approving pledged supplementary lending (PSL) for those projects.

SMM learned that CDB only took away the approval authority of local branches. New redevelopment projects are subject to approvals from the head office, and that existing projects can still carry on. The PSLs are also being processed as usual.

Loans from CDB accounted for 66% of the overall investment in shanty town rebuilding in 2016 and 48% in 2017, acccording to China Securities. PSL is an important source of credit for the real estate sector. A total of 437.1 billion yuan was injected into shanty town redevelopment through PSL in the first five months of this year, up 48.3% year on year, and the majority was from CDB.

Besides, physical homes rather than cash subsidies would be the major compensation for former residents in the shanty town.

 

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