According to a report from Bloomberg on Friday, it is feared that there may be a new crisis in the Chinese real estate market, with over $1 billion worth of real estate mortgage loans at risk of default.
Informants revealed that Hong Kong developer Parkview Group has a $940 million loan due on Friday. The company is seeking a one-year extension, and negotiations are still ongoing. As of the 13th, one of the loan banks, Taiwan’s Bank SinoPac, has not approved the extension of part of its loan.
Additionally, a fund led by private equity firm Gaw Capital Partners failed to repay a $260 million loan due this week. Creditors may announce the loan default in the coming days.
The loan banks include HSBC, Hang Seng, UOB, and several Taiwan banks. These banks are facing a dilemma as extending deadlines again may not solve the industry issues, while announcing borrower defaults could result in loan losses. Currently, creditors are struggling to reach a consensus on refinancing plans for the expiring loans as these debts continue to accumulate.
The stagnation in the real estate markets in mainland China and Hong Kong has persisted for many years, leading to billions of dollars in bond defaults and putting pressure on bank creditors.
Although many banks are reluctant to increase their exposure to the Chinese real estate sector, selling off real estate assets in the event of default is also not an ideal option.
In August, Parkview Group secured a three-month extension for a loan led by UOB. The loan was secured against Parkview Green, a landmark property in Beijing’s Chaoyang District.
Due to insufficient cash flow from Parkview Green to repay the debt, banks are concerned about the extension. Sources revealed that Parkview Group listed the Parkview Green asset for sale in 2024 but has not found a buyer yet.