Hong Kong (CNN Business)Another major Chinese developer defaults and is sickThe real estate sector, the world's second-largest economy.
China's real estate sector has moved from one crisis to another since 2020, when Beijing began cracking down on excessive developer borrowing to curb high debt and control runaway home prices. Is lurking.
Founded in 2001 by entrepreneur Hui Wing Mau, Shimao develops large-scale housing projects and hotels nationwide. It owns Shanghai Shimao International Plaza, one of the tallest skyscrapers in the center of Shanghai.
In March, the company estimated that 2021's net profit plummeted by about 62% year-on-year, primarily due to the "harsh" environment facing the real estate sector. Later, due to the blockade in Shanghai, the announcement of the 2021 results was postponed.
“The Group has experienced a significant decline in contract sales in recent months due to the significant changes in the macro environment of the Chinese real estate sector since the second half of 2021 and the impact of Covid-19. It is expected to continue in the short term until the real estate sector stabilizes. "
The company added that it is trying to reach a "friendly resolution" with creditors by failing to repay the principal of other offshore debts . Without an agreement, creditors may accelerate repayments to the company. Since the bankruptcy of
Industry problems are exacerbated by Beijing's Zero-COVID policy and economic slowdown. China put many of its major cities, including Shanghai, under strict siege earlier this year, fighting an increasing number of Covid cases and severely damaging its business operations.
On Friday, real estate research firm China Index Academy found that prices for new homes in 100 cities in the first half of this year fell by more than 40% compared to the same period last year. ..
June sales show signs of a dramatic drop from the previous month, but Beijing's continued commitment to the Zero-COVID policy makes the road to a recovery in the real estate sector "quite bumpy." It's likely, Nomura analyst said. In a memo on Monday.