Commenting on China's effort to restructure real estate debts, SMU Associate Professor of Finance Fu Fangjian noted that debt reduction through negotiations with creditors or debt-to-equity swaps are standard financial tools during industry downturns. "When businesses face difficulties in a declining sector, creditors must recognise the reality," he said. In China, there are currently over 90,000 qualified real estate companies, but from an economic supply and demand perspective, the per capita housing area is already substantial. This suggests that China may no longer need as many developers in the future, leading to natural market exits. Assoc Prof Fu noted that market exits due to debt issues will inevitably be painful, leading to bad debts and financial losses for creditors and investors. Homebuyers may also face unfinished projects. The government's current "ensuring housing delivery" policy primarily aims to protect homebuyers' interests.
