China’s urban village redevelopment plan to benefit largest state-owned developers, impact of real estate investment limited – Fitch Ratings

 

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China’s plan to redevelop urban villages in major cities could benefit large state-owned real estate developers in the long term, but given the program’s focus on large cities, its impact on China’s real estate investment and new home sales will likely be limited, said Fitch Ratings.

The program targets rural land in mega and super-mega cities with populations of 5 million or more, and that is different from previous rounds of urban renewal campaigns, which were focused on urban land in 3rd-tier cities or below, it said. 

Subsequent plans released by the Shanghai and Guangzhou municipal governments suggest that this round of redevelopment could last at least a decade, Fitch said. 

The scale and pace of investment in the program will depend on the ability of local governments and their financing platforms to secure new financing, which may be limited in cities with high levels of outstanding debt and weaker financial performance, it said.