What’s behind the record pace of M&As in China’s property sector?
Q3 Transactions by value set to outstrip Q2, already the highest on record
Moody’s Investors Service has identified three factors that will favor large Chinese developers with stable funding access and strong cash flow, The Asset reports.
Developers’ desire to attain greater economies of scale and market share, strong liquidity from contracted sales during the past six to 12 months, and an increasing number of land sales by local governments carrying restrictions have all contributed to the rapid pace of consolidation in the property market.
The value of M&A transactions is set to reach a record high for the year, with deals likely to reach an all-time quarterly high in the third quarter, following a record setting second quarter.
“A number of large M&A transactions were announced in July, including the proposed buyout of Global Logistic Properties by a Chinese consortium that includes China Vanke Company for around US$11.6 billion.
There is also the proposed sale of assets by Dalian Wanda Commercial Properties Company to Sunac China Holdings and Guangzhou R&F Properties Company for a total consideration of around 63.7 billion yuan (US$9.48 billion).
The largest transaction announced during the second quarter was China Vanke’s acquisition of the property assets of Guangdong International Trust and Investment Corporation for around 55.1 billion yuan.”