Shanghai Developer Said to Halt Project on Funding Shortage

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A closely held Shanghai developer has suspended construction at a property project due to a lack of funds, according to two government officials familiar with the matter.

Construction at Shanghai Yuehe Real Estate Co.’s mixed-use project, including residential, office and retail space, in the city was halted this month and the project was frozen by a court, according to the people, who asked not to be identified because they aren’t authorized to speak publicly about the matter. Shanghai Pudong Development Bank Co. (600000), a medium-sized Chinese bank, loaned about 240 million yuan ($39 million) to the 220,000 square meter (2.4 million square foot) development in suburban Jiading district, they said.

“There will be more developers having troubles as the property downturn prolongs,” said Duan Feiqin, a Shenzhen-based property analyst at China Merchants Securities Co., in a phone interview today. “Many Chinese cities face oversupply of those mixed-use property projects amid the e-commerce boom, while a lot of developers, especially those small ones, are not capable of doing such developments.”

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