The largest real estate development company in China, "Country Garden", announced Thursday its first annual losses in 15 years, at a time when this sector in China is facing a serious crisis that threatens the future of other companies. In a country where buying property is often considered a precondition for marriage and a necessary investment.
However, in an effort to reduce the sector's indebtedness, the Chinese authorities have tightened, starting in 2020, the conditions for obtaining credits for real estate developers.

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Edit | Paul Mitchell
Economics news section
March 30, 2023

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     The sector crisis was exacerbated by the financial troubles faced by Evergrande, one of the largest real estate development companies in China, as it weakened the demand for housing purchases.

Since then, many real estate developers have struggled to survive, especially with the decline in demand for real estate last year in light of the economic slowdown and the uncertainty surrounding the future in light of the health situation in China.

In this context, Country Garden incurred losses of nearly 6 billion yuan (more than 800 million euros) for the whole year 2022, according to a statement issued by the Hong Kong Stock Exchange, where its shares are traded.

This is the first time the company has recorded losses since listing its shares on the stock exchange in 2007.

In 2021, the company achieved profits of 26.7 billion yuan (3.5 billion euros at the current exchange rate).

And the company announced, commenting on sales, that "2022 was not a year like any other. The Chinese real estate sector faced an unprecedented economic environment that can be described as a harsh winter."

The company, which has always been known for its solid financial position, has been suffering for months as a result of the real estate sector crisis.

In August, it announced a 96% decline in its semi-annual profit.

Analysts said Country Garden is more vulnerable than its competitors because among its main customers are migrant workers whose incomes are more modest.

The real estate sector, along with construction, accounts for about a quarter of China's GDP, and a huge number of workers with limited skills live from it, which is an important guarantee of social stability.

In an effort to revive this sector, the Chinese authorities have in recent months softened their policies. In January, they announced softening the financing conditions for thirty real estate groups whose conditions are considered sound, including Country Garden, at a time when major companies are seeking to continue in light of the overall market slowdown.

 

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