China Construction Bank (CCB) said it plans to set up a 30-billion-yuan ($4-billion) fund to finance rental housing.
Reuters reported in July that China planned to launch a real estate fund to help property developers resolve a crippling debt crisis. The fund would initially be set at 80 billion yuan through support from China’s central bank, with CCB contributing 50 billion yuan, a source said.
According to latest CCB relase to mitigate the real estate crisis CCB to set up $4.2 bn fund to buy properties
The fund will “invest in existing assets” of real estate companies and renovate the properties into rental housing, the lender said in a statement to the Shanghai stock exchange Friday.
The country’s banking regulator has approved the investment in the fund, it added.
China’s real estate companies have been grappling with a credit crunch after the government earlier tightened lending to the sector to reduce debt risks.
Inside china financial health of developers has worsened as property sales slumped, sparking a nationwide crisis where home buyers are boycotting mortgage payments to protest the failure of developers to deliver projects.
Authorities have taken several steps to stem the downturn that’s hurt economic growth as well as government income from land sales.
They cut interest rates, asked banks to meet the reasonable financing needs of developers, and are offering special loans totaling 200 billion yuan through policy banks to ensure property projects are delivered.
The country has also sought to expand the rental housing market to ensure sustainable growth in real estate over the long term and CCB has been spearheading that national strategy.
The bank had 181 billion yuan in outstanding loans related to rental housing by the end of June, 35% more than at the end of December. A home-leasing platform it operates has covered 96% of areas at the city level and above in China, according to its first half report this year.