Embattled Chinese language property developer Evergrande isn’t beginning the 12 months in a festive temper.
The corporate mentioned Tuesday that it had obtained an order from an area authorities to tear down 39 buildings on the Chinese language tropical island of Hainan. Evergrande hasn’t disclosed why the Danzhou authorities ordered the demolition. Native media reported that the development was authorized illegally. Evergrande mentioned the order gained’t have an effect on the remainder of the event, on which it has spent 81 billion yuan, the equal of $12.8 billion, for greater than 60,000 residences.
As Evergrande’s troubles have moved into the highlight, native authorities have most likely stepped up their scrutiny of the developer, resulting in nasty surprises like this one. The chance is one more headache for Evergrande, which is already scuffling with tight liquidity and evaporating gross sales.
Main credit-rating corporations have already declared Evergrande in default after it missed coupon funds final month. The native authorities of Guangdong province, the place Evergrande is predicated, stepped in final month to assist handle its debt disaster.
The developer mentioned Tuesday that contracted gross sales for 2021 have been 443 billion yuan. Which means its contracted gross sales from Oct. 20 to the tip of the 12 months amounted to solely 720 million yuan, utilizing beforehand disclosed figures. Compared, its contracted gross sales for November and December in 2020 have been round 90.7 billion yuan, implying a greater than 99% year-on-year drop.
Extra broadly, China’s housing market stays within the doldrums. In December, contracted gross sales for twenty-four main property builders fell 31% from a 12 months earlier, in accordance with Morgan Stanley. There are indicators that the market is stabilizing as Beijing has began to ease coverage, particularly for builders with decrease leverage: On a month-on-month foundation, contracted gross sales grew 15% final month. However firms that had overextended themselves, akin to Evergrande, nonetheless appear to be out of luck.
Final 12 months was a horrible one for Chinese language builders that partied arduous in the course of the increase days. The 12 months 2022 might not be a lot better.
Supply: Live Mint