What China’s Three Red Lines Mean for Property Firms: QuickTake

china homes real estate property

Photographer: Qilai Shen/Bloomberg

The danger lurking in China’s debt-laden real estate sector was never so clear as in late September, when word of a possible cash crunch at China Evergrande Group, the world’s most indebted property developer, sent investors running for the exits. With seven more of the 10 most-indebted developers also based in China, policymakers in Beijing have drafted what state-run media are calling “three red lines” — metrics regarding debt that developers will have to meet if they want to borrow more. The new approach promises to be a game changer for a sector that accounts for about 29% of economic output.

1. How will it work?

The People’s Bank of China and the Ministry of Housing announced in August that they’d drafted new financing rules for real estate companies, but have said little more. But the media reports and people familiar with the

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