R&F Group finds a silver lining in upbeat overseas property markets, but is it enough to avert a collapse?
- R&F is marketing projects in London, Australia, Malaysia’s Johor Bahru and in Cambodia’s capital Phnom Penh amid upbeat market conditions there
- The company’s development in Malaysia could benefit from pricier Singapore market
Guangzhou R&F Properties, one of China’s most indebted developers, is capitalising on upbeat sentiment in overseas markets where some of its projects are located, to inject some relief into its operations and improve its creditworthiness at a time when the sector is experiencing sluggish conditions in China.
The debt-stricken group is marketing projects in London, Australia, Malaysia’s Johor Bahru and in Cambodia’s capital Phnom Penh and leveraging buoyant market conditions in these markets, Garry Yau, R&F Group’s Hong Kong regional sales and marketing director, told the Post.
“The local markets in which some of the company’s projects are located have been booming recently. As the pandemic has passed, the market [momentum] has resumed,” said Yau, while highlighting the R&F Princess Cove project in Malaysia, which has seen Singaporeans and Malaysians rushing in to buy.
R&F Properties, set up in 1994, began rolling out its global strategy in 2013. It is now one of China’s largest property companies with operations in China, Malaysia, Australia, the United Kingdom, Cambodia and South Korea.
Yau’s comments follow a difficult year when it completed a debt restructuring involving 10 tranches of US-dollar denominated notes, totalling around US$4.9 billion.
The company said in its financial report in March that with unprecedented negative sentiment in recent years, various forms of refinancing were impractical.
Buyers from China are snapping up luxury Singapore property at a record rate
“Hence, the group began assessing alternative options and engaged creditors early to seek a workable solution,” it said in the report, referring to its debt overhaul.
The company, which was unable to repay certain bank and other borrowings of 1.963 billion yuan in January this year, was classified by Fitch Ratings as “in default on certain bank and other borrowings”.
The ratings agency said the company had completed 4.9 billion yuan of asset disposals in 2022 and more sales could emerge.
“We expect further asset disposals to provide additional liquidity. The company continues to seek opportunities for asset disposals, and believes its hotel portfolio can attract investor interest,” Fitch said.
The company acknowledges the challenges it is facing.
“Under a difficult economic environment and financial turmoil, the group had to explore alternative means of sourcing liquidity. Over the past 18-months, the group had been disposing assets in China and overseas as a means of generating cash flow,” the company said in its financial statement published in March.
Yau said the company’s Malaysian developments could benefit from the pricier market in Singapore.
The company’s R&F Princess Cove project is located in Johor Bahru, which is close to Singapore, and suitable for those priced out of the island state’s surging property market. Singapore’s limited land reclamation potential and soaring housing rents had had a “spillover effect” in Johor Bahru where residential property prices are a lot lower.
Yau drew parallels with Shenzhen. “Singapore-Johor Bahru is like the Southeast Asian version of Shenzhen-Hong Kong”. It is located on top of the Johor Bahru–Singapore Rapid Transit System Link which is set to become operational in 2026, he said. Cecilia Wong, business development director at Penta Global, said Malaysian property was attracting interest from buyers looking to purchase retirement homes.
In R&F’s project in Cambodia capital Phnom Penh, where over half of the total 5,000 units have been sold at US$1,900 to US$2,100 per square metre, a third of the buyers are from China and Cambodia each. Real estate agency Fortune International said buyers were attracted to Cambodian property markets because of the low prices and the country’s favourable demographics.
