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PROPERTY 9
THURSDAY JULY 26, 2018 • THEEDGE FINANCIAL DAILY

Anyone for rental housing? In China’s debt-

laden Xiamen,
real estate

boom chokes
consumption
It can prove to be a viable alternative to homeownership

BY STELLA QIU & ELIAS GLENN

BY SHAWN NG specific law for private sector ten- thriving rental market as a viable out that some of the Scottish laws
of EdgeProp.my ants and landlords to safeguard alternative to homeownership”. are worth studying, such as the XIAMEN/BEIJING: Th rough-
their rights. He noted that a tenancy agree- one requiring landlords to regis- out China, home prices that
KUALA LUMPUR: Malaysia has to “This will contribute to the de- ment is not adequate as the terms ter themselves with the Scottish are among the highest in the

strengthen the legal framework of velopment of a thriving rental mar- and conditions of the agreement Landlord Register to ensure that world relative to incomes have

the local rental market to nurture ket as a viable alternative to home- are not standardised under a law. they are deemed to be fit to lease pushed millions of households
renting as a viable alternative to ownership,” he told the audience Instead, they are drafted by the out their properties. to debt levels similar to those

homeownership, said Amir Toh at the Affordable Housing Confer- landlord and the tenant, which “It is a criminal offence if a land- seen in the US just before its
Francis & Partners advocate and ence 2018 in Kuala Lumpur could result in an inequality lord rented out his/her proper- housing crisis, according to
solicitor Ivan Chan. yesterday. of bargaining power for ty without being registered and a new study by the Institute
Chan said an enhanced private Chan was one of the certain parties in some he/she can be fined up to £50,000 for Advanced Research at the

rental segment can help to narrow speakers at the confer- circumstances. (RM267,071) if found guilty,” he Shanghai University of Finance
the supply-demand gap for aff orda- ence, delivering his talk He proposed that said. and Economics.
ble housing. entitled “Developing a Malaysia can learn from While the Scottish rental act Economists are sounding
“As stated by Bank Negara Ma- countries that have a do not require tenants to register the alarm that such debt has
laysia, one of the strategies is to im- Chan: As stated by Bank Negara rental act, such as Scot- themselves, Chan suggested that started to crimp consumption,
prove the rental market by strength- Malaysia, one of the strategies is to land, which implemented they also need to be registered to undermining Bejing’s plan to
ening the legal framework. improve the rental market the Private Housing protect the landlords. lean on domestic demand to
“Hence, we need to identify by strengthening the (Tenancies) drive growth amid a heated
and adopt policies and initiatives legal framework (Scotland) trade dispute with the US.
that are being undertaken in other (like a rental Act). Act 2016 in This article was first published in Wang Jun, chief economist
countries to strengthen the legal Photo by Low early 2017. www.EdgeProp.my. Check out the at Zhongyuan Bank in Beijing,
framework of the rental market in Yen Yeing/ Ch an website for the latest property news says slowing income growth
Malaysia in order to implement a EdgeProp.my pointed and listings and high household borrow-
ing levels will limit how much
consumers can boost economic
growth in the short term.
Housing downturn puts US$20b Indian loans at risk impacting the amount of dis-
“Pressure from mortgages is
posable income available to
spend elsewhere,” he said.
BY DHWANI PANDYA Xiamen, a prosperous
& ANTO ANTONY coastal city in Fujian province,
stands out: Its four million res-
NEW DELHI: Indian lenders strug- idents are the most indebted
gling to recoup loans worth about of any large city in China, ac-
US$20 billion (RM81.2 billion) to cording to a Reuters analysis of
troubled property developers have central bank data.
to contend with another challenge: Known for warm weath-
A lacklustre recovery from the worst er, seafood, and a laid-
home-sales slump this decade. back lifestyle, Xiamen is the
To recover the dues, banks are fourth-most-expensive real
taking control of land parcels and estate market in the country,
unfinished projects that can be despite incomes signifi cantly
sold along with loans. Th is comes lower than in cities with com-
at a time when home sales vol- parable home prices.

umes have declined about 40% “An influx of property spec-
over four years and prices have ulators from other cities in the
dropped as much as 20% on aver- province attracted to Xiamen’s
age, said S Sriniwasan, managing lifestyle drove property prices
director of Kotak Investment Advi- to record highs, causing pan-
sors, which oversees the alternate ic buying among locals,” said
assets business of parent Kotak Wang Yanwu, an assistant pro-
Mahindra Bank Ltd. fessor at Xiamen University’s
“Weaker hands are going out School of Economics.
of business in realty and lenders Xiamen is now crowded with
are working on recovering US$20 recently built high-rises, and the
billion worth of stressed loans to local government is promoting
developers,” said Sriniwasan, who development in surrounding

has been bidding to buy proper- districts off the main island.
ties that banks are putting on the The city’s new home pric-

block. ‘‘All those land banks, which tial property prices continued to fall (RM240 million) and is examining myriad schemes that could drag on es increased 53% from 2015

developers used to tout as a val- across major cities and sales were another three buyouts, said Kiran indefinitely — is expected to trigger through June, or about 19% an-
uation booster, are turning into about stagnant, even as project Shingwekar, chief executive offi cer a bout of deals. nually, the most among 70 cit-
bank lands now,” and creditors will launches improved, according to of IARCL. ies tracked by China’s National
have to take haircuts while selling a Knight Frank report published “Banks have limited head Loan exposure Bureau of Statistics. Disposable
the collateral (see chart — Realty yesterday. Federal elections next room and expertise in bringing Outstanding loans from banks to income growth in Xiamen aver-
Lending Mix). year along with rising infl ation and a stressed realty project back on realty developers have been little aged 8.4% in the same period.
Developers, including Jaypee interest rates may mean a “rocky track and hence it makes sense changed at about 1.8 trillion rupees Nationwide, new home pric-
Infratech Ltd and Unitech Ltd, have way ahead” for the industry, said for them to sell down the loans for the two years through May, ac- es have risen 20.7% since 2015,
been taken before India’s courts by chairman and managing director and assets to firms specialising cording to data from the central according to Reuters calcula-
irate homeowners and creditors as Shishir Baijal. in the segment,” he said. “Their bank. In addition, non-banking fi - tions based on offi cial data.
apartment sales slumped in the lack of willingness to take steep nance companies have an exposure But in an alarming sign for
once red-hot South Asian market Land oversupply hair cuts has been delaying some of 2.2 trillion rupees to the sector till homeowners, home sales in
following the triple whammy of There is an oversupply of land par- of these deals.” December, according to an Ambit Xiamen slumped after new

a surprise cash ban, tax reforms cels in the market, weighing down Lenders may be running short Capital report published in April. rules restricted purchases
and a consumer protection law for on pricing, as banks push to recover of options though. India’s central Lenders including banks and and prices of existing homes

the sector. Last year, home sales loans, according to Indiabulls Asset bank issued a directive in February finance companies operate at the fell 4.8% in the year to June,
plunged to a seven-year low and Reconstruction Company Ltd. Th e forcing them to restructure loans highest-risk end of the realty mar- compared with a 3.9% average

prices in some of India’s biggest Mumbai-based bad loan buyer has quickly or take defaulters to bank- ket, providing financing for land increase for 70 large cities in

cities tumbled. already purchased stressed realty ruptcy court. The 180-day deadline acquisition or construction, Srin- the same period, according to

In the first half of 2018, residen- assets worth four billion rupees to recast stressed debt — replacing iwasan said. — Bloomberg Reuters calculations. — Reuters