Evergrande has been ordered to demolish 39 buildings at a Chinese resort

Chinese media reported over the weekend that authorities in Hainan province – a tropical holiday island off the coast of southern China – had ordered Evergrande to demolish 39 buildings, saying building permits had been obtained illegally.

The company acknowledged the order in a post on WeChat Monday night, but added that it did not affect other buildings in the same real estate project, which involves around 61,000 property owners.

The 39 buildings are part of Evergrande’s giant Ocean Flower Island project in Hainan, where the company has invested nearly $ 13 billion over the past six years.

The company stopped trading in its shares in Hong Kong on Monday. In a submission to the Hong Kong Stock Exchange on Tuesday, the company said it would resume trading, confirming that it would “actively communicate” with the authorities about the Ocean Flower Island project and “solve the problem properly.”

The shares rose as much as 10% after trading started in the early afternoon, before the rise was reduced. They were last up 1.3%.

The world's most indebted property developer reports progress in completing housing

In Tuesday’s submission, Evergrande also said that they have achieved an agreed sale of 443.02 billion yuan ($ 70 billion) for 2021. That was a decrease of 39% from 2020 sales figures. Regarding liquidity, the company said it would continue to “actively maintain communication with creditors, strive to address risks and safeguard the legitimate rights and interests of all parties.”

Evergrande – which was China’s second largest real estate developers by sale in 2020 – coils under more than $ 300 billion of total commitment.

It has been arguing for several months to raise money to repay lenders, and the company’s chairman Xu Jiayin is said to have sold out personal assets to support the finances. But it does not seem enough to avoid default.
In December, Fitch Ratings declared that the company had defaulted on its debt, a downgrade the credit rating agency said reflected Evergrande’s inability to pay interest due that month on two dollar-denominated bonds.

Analysts have long been concerned that a collapse of Evergrande could trigger greater risk to China’s real estate market, damaging homeowners and the wider financial system. Real estate and related industries account for as much as 30% of the country’s GDP. The US Federal Reserve warned in November that problems in Chinese real estate could damage the global economy.

There is already ample evidence that Beijing is taking a leading role in guiding Evergrande through debt restructuring and extensive business operations.

However, analysts warned that the real estate crisis remains a looming threat to China.

Source link

Back to top button