Chinese cities impose new property controls to curb speculation

China’s home prices have surged since late 2015, with the country’s biggest cities including Shenzhen and Shanghai the first to see huge spikes in their markets. (Reuters)
Updated 24 September 2017
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Chinese cities impose new property controls to curb speculation

BEIJING: A number of provincial capitals across China have rolled out new curbs to further slow home property sales, and bear down on lingering speculators that could destabilize markets ahead of a key Communist Party congress next month.
Shijiazhuang, capital of Hebei province, has banned investors from selling newly bought homes for up to five years, while Changsha, capital of Hunan province, has barred homeowners from buying a second property for up to three years from the time of their first home purchase, according to the official Xinhua News Agency.
Changsha has also limited property sales to non-local residents to one unit per person.
Home prices have surged since late 2015, with the country’s biggest cities including Shenzhen and Shanghai the first to see huge spikes in their markets. Provincial capitals started to join in the fray last summer as speculators flooded into tier-two cities.
The government, concerned about potential instability posed by frothy property markets and soaring credit growth, has increasingly clamped down on speculators since late last year, unleashing a series of restrictions to douse the country’s super-hot home property markets.
Average new home prices in China’s 70 major cities rose 0.2 percent in August this year from July, the slowest pace in seven months, according to the latest official data.
Prices of homes in China’s tier-one cities including Beijing, Shanghai, Shenzhen and Guangzhou either fell from a month earlier or were unchanged. One outlier was Chongqing, in southwest China, where prices inched up 0.3 percent from July.
Authorities in Chongqing, along with those in Nanchang in the Jiangxi province, have since banned transactions of new and second-hand homes for two years after purchase, according to documents published on the municipal governments’ official websites.
The various measures took effect last week.
Additionally, Xian, capital of Shaanxi province, has told developers from Monday to report home prices to local price-monitoring departments before sale, and reiterated its pledge to crack down on property price manipulation and speculation.
Signs of a more stable housing market will be good news for the Communist Party as it prepares for a once-in-five-years congress, a politically sensitive time.
China’s property market has become a major source of financial risk. A central bank official earlier this month said authorities needed to maintain strict controls over property markets in first and second-tier cities where prices gains have been the strongest.
Short-term household loans in August doubled from July to 216.5 billion yuan ($32.85 billion), as some home buyers may be turning to short-term consumer loans due to curbs on mortgages, analysts say.


UAE regulators ask corporates to declare exposure to Abraaj

Updated 21 June 2018
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UAE regulators ask corporates to declare exposure to Abraaj

  • Air Arabia admits $336 million exposure to Abraaj funds.
  • Abraaj sells its Latam, Sub-Saharan Africa, North Africa and Turkey Funds to Colony Capital.

DUBAI: The United Arab Emirates’ top securities regulator has asked UAE-listed companies to declare their exposure to Dubai-based private equity firm Abraaj, which filed for provisional liquidation last week.
The Securities & Commodities Authority sent a letter earlier this week and companies had until Thursday to submit their responses, Obaid Al-Zaabi, chief executive of the regulator, told Reuters.
Air Arabia, a Dubai-listed low-cost carrier, said this week that it had a $336 million exposure to Abraaj, which is the Middle East’s biggest private equity firm. Shares in the airline plunged because of these links.
Al-Zaabi said some companies in the UAE had exposure to Abraaj, without naming them.
A court in the Cayman Islands, where Abraaj Holdings is registered, ordered this week that PwC be appointed as provisional liquidators of the company and Deloitte as liquidators of Abraaj Investment Management Ltd.
Abraaj said that the latest restructuring agreement has received in-principle regulatory approval and is expected to close upon approval from the Cayman Islands court and other customary consents.
On Thursday, the Dubai Financial Services Authority (DFSA), which is the regulator of the Dubai International Financial Center (DIFC), said it would discuss “various matters” with the liquidators and “will continue to work toward safeguarding the interests of investors.”
The DFSA is involved because Abraaj has an entity regulated in DIFC.
Abraaj Group agreed to sell its Latin America, Sub-Saharan Africa, North Africa and Turkey Funds management business to US investment management firm Colony Capital Inc, the companies said on Thursday.
The sale agreement comes after months of turmoil at Abraaj in the wake of its dispute with four of its investors, including the Bill & Melinda Gates Foundation and International Finance Corp. (IFC), over the use of their money in a $1 billion health care fund. The group has denied it misused the funds.
The sale is part of a provisional liquidation and restructuring as set out in a court order. Financial terms of the deal were not disclosed.
Colony Capital has also agreed to oversee, on an interim basis, other Abraaj group funds that are not being acquired so that the group and all its stakeholders have a “comprehensive global solution in place,” the companies said.
The other group funds include the $1 billion health care fund, and some legacy funds of the private equity group.
Sources told Reuters earlier that US buyout firm TPG was in talks with investors in Abraaj’s health care fund to take over management of the assets of the $1 billion fund.
The K-Electric asset, which is being sold in Pakistan and is owned by Abraaj Holdings, is also not part of the transaction.
Colony’s deal comes after other investors such as Cerberus Capital Management had also made offers for the Abraaj business before it filed for provisional liquidation in the Cayman Islands.
A unit of Abu Dhabi Financial Group earlier this week made a conditional offer to buy Abraaj’s management interest in all of its limited partnerships for $50 million, according to a document seen by Reuters.
Since Abraaj’s row with some investors became public early this year, it split its investment management business and holding company, while its founder Arif Naqvi stepped aside from the day-to-day running of its private equity fund unit and the firm halted its investment activities.
Tom Barrack, executive chairman of Colony Capital, said that he hoped that the transaction would enable the process of rebuilding on all sides and also bring an end to the speculation that has swirled around Abraaj over the past months.