Real Estate Finance in China: Current Issues and New Frontiers

Real estate is the pillar industry of the national economy. As a capital- intensive industry, real estate financing not only plays an important role in enterprises’ business operation but also has huge implications for the nation’s credit resource allocation. In this article, we analyzed the status quo and new trends of real estate financing using both macro-level and industry-level data along with industry regulatory policy dynamics. And we discussed how what current alternatives are available for real estate financing. We concluded that domestic real estate companies are highly dependent on traditional indirect financing such as bank loans. Given that nonstandard debt financing was hampered, equity capital raising was deficient and the bond market was depressed for the real estate industry, we believed that innovative financing options such as asset-backed securitization and private equity fund would be more than just expediency but strategic approaches for real estate financing in the future.