Developers Facing Tighter Credits

Banks are charging more and lending less to property developers in Asia.

Although interest rates in S'pore and Hong Kong have fallen, but credit spreads on loans have shot up. Prior to sub-prime mortgage crisis, developers could borrow at <100 basis-point spreads, but now the spreads are at 200 to 400 basis points. Banks are also reducing the loan-to-value ratio from 70-80% to 50-60%. Thus, developers, especially those smaller players, are facing higher costs and lesser financing for their projects.

* AsiaOne-Funding *