China’s large developers are tightening their hold on the real estate market, capturing an ever-larger share, even as sales growth is expected to slow and worries about debt persist. According to U.S. investment bank Citi, the top 10 Chinese developers are forecast to have close to 35% market share by the end of this year, up from around 27% now. They held just 14.2% of the market in 2012. The number of developers posting more than CNY50 billion in sales rose to 40 in 2017 from 25 in 2016, with sales growing from 53% to 84% of the total, real estate firm CREIS said. The number of smaller developers, with sales between CNY10 billion and CNY50 billion, fell to 104 from 106.

Although the total number of home transactions is expected to drop about 5%, securities firms and rating agency analysts said Hong Kong-listed developers could see 30% sales growth on average this year, down from an average of 40% growth in 2017. But the growth will not be without risk. Ramped-up land purchases mean the developers will add debt, making their plans to deleverage more difficult. China Evergrande and Sunac China had the highest gearing ratios at more than 200% in the first half of last year. Both said in October they intended to reduce their debt ratios, but neither halted their buying sprees. If there is a market correction, developers’ liquidity will be tested. But Standard & Poor’s Director Christopher Yip said even in that scenario, he didn’t see a large impact. “We don’t think there’ll be a big probability for rated developers to be unable to repay their debt other than very weak ones with poor liquidity and refinancing prospects; others should have secured the financing before they buy land,” Yip said. Several major developers said they were confident in double-digit sales growth this year.

A softening but still resilient property market, underpinned by steady prices, would be welcome news for both China’s policymakers and developers. Beijing is eager to keep the market stable as the government tackles an alarming build-up in debt. Many investors are overlooking debt risks and focusing more on revenue, as evidenced by surging share prices. China property stocks were among the best performers in Hong Kong in 2017, propelled by robust sales, with Evergrande up 480%, Sunac jumping 460%, and Country Garden climbing 270%. Nine other developers saw shares surge more than two-fold, the Shanghai Daily reports.

Shanghai’s Grade A office market performed vibrantly in 2017 despite vacancies rising slightly amid record supply. More than 2.2 million square meters of new Grade A offices – 1.6 million sq m in the decentralized market and the rest in the CBD – were released to the local market, a record for Shanghai, and a significant surge from 1.02 million sq m in 2016, JLL said in a report. The average vacancy climbed 2 percentage points year-on-year to 10.2% in the CBD at the end of 2017 while that in the decentralized market gained 8.8 percentage points to 26.8% during the same period.

China has banned non-bank financial institutions from channelling funds into the property and infrastructure sectors via entrusted loans, closing an important loophole for non-traditional financing in the real estate sector.