Developers carry funding search overseas

Gemdale International Holding Co Ltd, a Shanghai-listed property developer, will offer $350 million in five-year corporate bonds with annual yields of 7.125 percent on the Singapore Exchange this Friday, according to a statement released on the company's website Wednesday.

As government restrictions ramp up financing pressures for local developers, Gemdale is just the latest in a string of mainland property firms moving to shore up funding by placing bonds in offshore capital markets. According to experts contacted by the Global Times, these firms have had little difficulty in recent months attracting foreign investors willing to tap the mainland's growth picture.

In Hong Kong, mainland real estate companies were able to raise $1.25 billion from investors during October and $850 million during September, according to figures from Centaline China Real Estate, a research institution focused on the mainland real estate industry.

In a bid to cool down the mainland's overheated housing market, the government has placed restrictions on how much property developers can borrow from banks, raise via initial public offerings (IPOs), or collect from investors through debt or trust products, Zhu Daming, vice chairman of the China Real Estate Chamber of Commerce, told the Global Times.

"Since the start of this year, there have been no examples of developers hunting for capital through bank loans or an IPO, and cases of bond sales in the mainland market have become rare since the government started clamping down on the ballooning property bubble in 2010," Liu Yuan, research director at Centaline China Real Estate, told the Global Times.

As their capital ran low and developers struggled to secure cash to fund new projects amid the mainland's slowing economy, it was natural that they would begin exploring markets where the government's financing barricades did not apply, Zhu explained.

Meanwhile, the favorable conditions developing in overseas markets only increased the incentives of local developers to look abroad.

A third round of quantitative easing from the US Federal Reserve in September led to a surge of liquidity in the global market, especially in places like Hong Kong and Singapore where economic growth was relatively stable, making these markets particularly attractive to local businesses, Nie Riming, a research fellow at the Shanghai Institute of Finance and Law, told the Global Times.