Evergrande Property Sales Drop 26% as China’s Home Market Cools
(Bloomberg) — China Evergrande Group’s property sales fell in August as the real estate market slowed, dealing a fresh blow to the cash-strapped developer.
Contracted sales dropped 26% from a year earlier to 38.08 billion yuan ($5.9 billion), a filing showed late Friday. A year earlier, the firm had sales of about 51.48 billion yuan.
The world’s most indebted developer has become one of the biggest financial worries in China, given its teetering pile of $305 billion in liabilities to banks, shadow lenders, companies, investors, vendors and home buyers. Evergrande’s shares and bonds have plummeted to levels that suggest investors are bracing for a potential default.
Regulators in Beijing last month urged the company to resolve its debt woes in a rare public rebuke.
Evergrande this week warned that it risks defaulting on borrowings if its efforts to raise cash fall short. Despite selling stakes in some of its prized assets and offering steep discounts to offload apartments, the developer reported a 29% slide in profit for the first half with its mainland Hengda Real Estate and electric vehicle unit printing losses.
Regulatory tightening and the latest Covid-19 outbreak are clouding the sales outlook for Chinese residential property developers, Bloomberg Intelligence analysts wrote last month. Home prices grew at the slowest pace in six months in July.
Added to that, Evergrande’s vendors have suspended work on some projects due to unpaid bills, the company said in its earnings report. “The group will do its utmost to continue its operations and endeavor to deliver properties to customers as scheduled,” it said.
In an effort to soothe home buyers, Evergrande on Wednesday pledged to deliver on its housing projects, with billionaire Hui Ka Yan describing the directive as a “military order.”
Contact editor Michael Bellart (email@example.com)
Download our app to receive breaking news alerts and read the news on the go.
Get our weekly free Must-Read newsletter.
- MOST POPULAR