New Changes in the Financing Landscape of Real Estate Enterprises
On September 14, the Shenzhen Stock Exchange accepted the RMB 20 billion small public offering corporate bond application of China Overseas Enterprises Development Group Co., Ltd. (hereinafter referred to as "China Overseas"). This is the first small public offering corporate bond application of a real estate enterprise accepted by the exchange after the release of the new real estate policy on August 28.
According to the prospectus, of the RMB 20 billion, RMB 107 billion is planned to be used to maturing corporate bonds, and the remaining RMB 93 billion after deducting issuance expenses is planned to be used for the construction of 5 real estate projects in Beijing, Shanghai and Hangzhou or the repayment of interest-bearing liabilities of the projects, accounting for 46.5% of the total fundraising scale.
The RMB 15 billion corporate bonds registered by China Overseas in the previous round have all the raised funds used to repay and replace maturing corporate bonds. Now, the corporate bond funds are expected to re-enter the construction of commercial housing projects.
A financial professional from a real estate enterprise told *The Economic Observer* that since 2018, the use of corporate bonds for real estate project construction has been restricted by window guidance, and the raised funds are mainly used to repay old debts, with only a small amount invested in fields such as long-term rental apartments, affordable housing and resettlement housing.
On August 28, 2026, the China Securities Regulatory Commission issued the *Opinions on Capital Market Supporting the Construction of a New Development Model for the Real Estate Industry* (hereinafter referred to as the "Opinions"), clearly supporting real estate enterprises to issue corporate bonds, with the raised funds mainly used for real estate projects that meet policy requirements, and allowing the rolling renewal of existing corporate bonds.
Under the project-based framework of the new real estate development model, the corporate bond financing of real estate enterprises has begun to extend from the group-level debt repayment by new borrowing to specific projects.
01
Shift of Direction
Of the RMB 9.3 billion that China Overseas plans to invest in projects this time, RMB 7.8 billion will be used for the construction of 5 projects including Chaoyang One, Lijin Mansion, Anlan Beijing, Haichao Jiuxu and Huji Gangwan, and RMB 1.5 billion will be used to repay the interest-bearing liabilities of Chaoyang One and Lijin Mansion.
Previously, the RMB 4 billion third-phase corporate bond application of China Overseas in 2026 accepted on August 17 was planned to be used to repay three corporate bonds of "23 Zhonghai 01", "21 Zhonghai 08" and "16 Zhonghai 01", with no purpose for project construction.
According to data from Tonghuashun, since 2018, China Overseas has issued a total of 33 tranches of corporate bonds, with total raised funds exceeding RMB 550 billion. Except for the RMB 2 billion special bond for housing rental, all the rest are used to repay corporate bonds, debts and interest-bearing liabilities, and no purpose for commercial housing project construction is specified. This application is the first time for China Overseas in this period to clearly plan to use corporate bond funds for commercial housing project construction.
Similar changes have also appeared in the application materials of other real estate enterprises. On September 1, of the RMB 20 billion small public offering corporate bonds submitted for registration by China Resources Land, RMB 8.5 billion is planned to be used for 4 projects in Beijing, Shanghai and Hangzhou; on September 3, of the RMB 16.6 billion corporate bonds submitted for registration by China Merchants Shekou, RMB 5.55 billion is planned to be used for 7 projects in Beijing, Shanghai, Hangzhou and Xi'an. The proportion of project investment in the raised funds of the two companies is 42.5% and 33.4% respectively.
The above-mentioned financial professional of the real estate enterprise believes that the new policy clarifies that the raised funds of corporate bonds are mainly used for compliant real estate projects, while retaining the arrangement of repaying old debts with new borrowings, which provides a policy basis for funds to enter market-oriented commercial housing projects.
The review requirements are also being adjusted. On March 28, 2025, the Shanghai Stock Exchange issued the review guidelines No. SSE Development [2025] No. 45, setting review requirements such as project capital, investment proportion and income coverage for corporate bonds to be invested in compliant projects.
The above-mentioned financial professional said that after the implementation of the new Securities Law in March 2020, the public issuance of corporate bonds was changed to the registration system, and the review still focused on the financial status and solvency of the issuers. The new policy on August 28, 2026 promotes the extension of financing to projects, and the income and debt solvency of the fundraising projects will receive more attention.
The support of the Opinions for real estate enterprises also involves equity and asset securitization financing, including supporting listed real estate enterprises to issue stocks to specific targets, and investing the raised funds in market-oriented real estate projects that meet policy requirements; supporting the comprehensive use of tools such as shares, directional convertible bonds and cash to acquire real estate-related assets, and the supporting raised funds can be used to pay transaction consideration and for compliant real estate projects.
The Opinions also support the issuance of commercial mortgage-backed securities (CMBS) and asset-backed securities (ABS), the issuance of real estate investment trusts (REITs) relying on projects such as rental housing and urban renewal, or injecting related assets into listed REITs through additional issuance, and supporting qualified private fund managers to establish real estate private investment funds.
The Opinions clarifies that the lead bank system shall be implemented for development loans, with one bank providing loans alone or taking the lead in a syndicate to implement closed management of project funds. The State Administration of Financial Regulation requires banks to reasonably distinguish between the group risk and project risk of real estate enterprises, with loan approval focusing more on the project itself, and the project shall set up separate accounts for independent accounting and independent fund operation.
This adjustment also extends to commercial real estate and trust financing. Commercial real estate loans introduce the project system, lead bank system and closed fund management, and set requirements respectively according to the stages of development, purchase and operation; real estate trust business is also required to take the project as the core and improve the closed fund management.
Combined with the change in the investment direction of corporate bonds, the financing of real estate enterprises is being organized more around specific projects, and the purpose, term and repayment arrangement of funds are matched with project construction, sales and operation.
02
Differentiation
Less than one month after the release of the new policy, differences have emerged in the application purposes of different real estate enterprises.
The single application scale of China Overseas, China Resources Land and China Merchants Shekou all exceed RMB 10 billion, with the proportion of project investment ranging from one third to nearly half, and the involved projects are concentrated in cities such as Beijing, Shanghai, Hangzhou and Xi'an.
The application scale of the three real estate enterprises in this round is also higher than the registered quota of the previous round. China Overseas increased from RMB 150 billion to RMB 200 billion, China Merchants Shekou increased from RMB 129.3 billion under the CSRC Approval [2025] No. 1210 to RMB 166 billion, and China Resources Land increased from no more than RMB 10 billion in 2023 to RMB 200 billion.
On September 16, the RMB 2.73 billion corporate bond application of Chongqing Longfor Enterprise Development Co., Ltd. was accepted by the exchange, and all the raised funds are planned to be used to repay old debts. Longfor is the only private real estate enterprise that applied for bond issuance after the new policy, and its raised funds have no arrangement for project investment.
This year, bonds of non-distressed private real estate enterprises such as Binjiang Real Estate, Seazen Holdings, Huayu Group, New Hope Real Estate and Jin Hui Group have all completed registration; the exchange once accepted a corporate bond application of Country Garden in March 2023, and the application was terminated in January 2025. In addition, no distressed real estate enterprises have appeared in the bond issuance list.
A person from a distressed private real estate enterprise told *The Economic Observer* that since 2021, the land acquisition expenditure of his real estate enterprise has remained at more than RMB 1 billion per year. There are two main reasons for the low land acquisition: First, in previous years, the enterprise's work focus was on deleveraging and ensuring delivery, and there were no more resources and funds for new projects; second, as a private enterprise, with limited financial strength, it cannot compete head-on with central SOEs and state-owned enterprises, and can only look for opportunities in the marginal areas of first- and second-tier cities and third- and fourth-tier cities.
In his view, due to the low land acquisition of private real estate enterprises, under the project-centered financing system, there are not enough projects that meet the bond issuance standards, which also limits the motivation to carry out bond financing for projects to a certain extent. Moreover, at present, the credit of private enterprises in the capital market is generally weak, and it is difficult to obtain the recognition of creditors even if they issue bonds.
For distressed real estate enterprises, the issuance of convertible bonds has always been one of the important means of debt resolution. Recently, there have been market rumors that some distressed real estate enterprises have issued mandatory convertible bonds in overseas debt restructuring, but they have encountered obstacles in the domestic regulatory filing process. As of press time, the regulatory authorities have not responded to this matter, and the progress of relevant filing remains to be confirmed.
The above-mentioned financial professional of the real estate enterprise said that the issuance of convertible bonds is one of the important ways for distressed real estate enterprises to restructure their overseas debts. If the filing is blocked, the approved restructuring plan may be overturned. He believes: "Once the debt-to-equity swap is not feasible, the distressed real estate enterprises can only undergo judicial restructuring or bankruptcy liquidation."
An investment banking professional told *The Economic Observer* that the regulatory authorities have not yet made a clear statement on how to handle the filing of overseas restructuring bonds of distressed real estate enterprises, and the market is still paying attention to how to connect the new and old policies and whether the policies supporting real estate enterprises to resolve debts will continue.
03
Track Switching
Corporate bonds have been piloted since 2007, but limited by the scope of issuers, they have not become an important financing channel for real estate enterprises for a long time. In January 2015, the *Measures for the Administration of the Issuance and Trading of Corporate Bonds* issued by the CSRC came into effect, expanding the issuers from listed companies to all corporate legal persons, simplifying the issuance review procedures and comprehensively establishing the non-public offering system.
The above-mentioned financial professional of the real estate enterprise recalled that at that time, due to the difficulty for private enterprises to obtain financing from banks, domestic bonds, overseas bonds and trusts became the main financing methods. Around 2018, with the gradual standardization of the supervision on the bond issuance of real estate enterprises, domestic bonds and overseas bonds are mainly used to "repay old debts with new borrowings", and cannot be used for land acquisition and project construction.
At the end of 2021, the liquidity risk of the real estate industry began to expose. In order to support private real estate enterprises to resolve debts and ensure delivery, the regulatory authorities increased the support for policies such as the refinancing of listed real estate enterprises and the expansion of private enterprise bond financing support tools, which to a certain extent prevented the further spread of the real estate liquidity risk.
The transformation began in 2025. In March of that year, the Shanghai and Shenzhen Stock Exchanges revised the corporate bond review guidelines, putting forward requirements for project capital, investment proportion and income coverage.
In early 2026, Ni Hong, Minister of the Ministry of Housing and Urban-Rural Development, emphasized in an exclusive interview with Xinhua News Agency that the real estate development should solidly implement the project company system, the real estate financing should implement the lead bank system, and the commercial housing sales should implement the existing housing sales system.
Under the new policy on August 28, 2026, the main body of real estate development has shifted from real estate enterprises to projects, and the corresponding financing has also shifted from real estate enterprises to project companies. Before the implementation of the new policy, real estate financing focused on the credit status and overall solvency of real estate enterprises; after the new policy, real estate financing pays more attention to the income and solvency of projects.
A person from a central SOE believes that after the new real estate policy, due to the extended capital return cycle, land acquisition and project construction occupy a large amount of funds for real estate enterprises, which puts forward higher requirements for the cash flow and reinvestment capacity of real estate enterprises. The fact that corporate bonds can be used for project construction supports the development of enterprises to a certain extent.
The new real estate policy still strictly requires real estate enterprises to acquire land with their own funds, and the funds obtained from financing such as bank loans and bonds shall not be used to pay land transfer fees and related taxes and fees.
The above-mentioned person from the central SOE said that before the introduction of the new policy, his enterprise had learned through communication with the exchange and underwriting institutions that the use of corporate bond raised funds had been expanded to projects, so when making the use of raised funds, in addition to the conventional repayment of old debts, the purpose of investing in projects was added.
A commercial bank professional told *The Economic Observer* that under the new financing model, the lead bank system is implemented for real estate financing. Compared with the original "guaranteed income regardless of profit or loss", the responsibility and pressure of banks have multiplied, while the income has not increased much, which also makes banks more cautious in selecting projects.
This article is from the WeChat official account "The Economic Observer", author: Tian Guobao, authorized for release by 36Kr.