Chinese Developer Stumbles

A property developer in China's Hangzhou city has filed for bankruptcy protection, falling victim to the government's two-year campaign to rein in property prices and pointing to wider problems ahead in the country's real-estate market, The Wall Street Journal reported. Analysts said the financial woes of Hangzhou Glory Real Estate Co., a small developer, won't drag down other firms in the hard-hit property sector. But they said that other weaker players could see similar strains. Bankruptcy proceedings for Hangzhou Glory Real Estate have begun, an official at the Yuhang district court in Hangzhou said on Wednesday. The date of the filing wasn't clear. Hangzhou Glory Real Estate has delayed delivery of some homes at its only project, West City Times Home, a saleswoman said by phone. She declined to give further details. The company is based in Hangzhou, the capital of coastal Zhejiang province and a magnet for well-to-do speculators looking for high-end real estate. The West City Times Home project is near Hangzhou's famous West Lake, a coveted area for wealthy Chinese. "It's normal to see some small-sized, cash-strained property developers go bankrupt following a two-year tightening cycle," said Gold State Securities analyst Li Lei. He said other smaller firms could be in danger, although blue-chip developers should be safe for now at least. The central government has set restrictions on home purchases and tightened credit to developers as part of its campaign to keep prices from spiraling higher. Average housing prices in Hangzhou fell 0.5% to 20,261 yuan (about $3,211) a square meter in March from a month earlier, according to data from the China Real Estate Index System. Read more. (Subscription required.)