China real estate crisis: Evergrande sells land for $1 billion

$300 billion in debt

The former real estate heavyweight is strangled by a debt estimated last year at some 300 billion dollars, in a sector in crisis in China. He is in the middle of negotiations to restructure it.

The 10,377 m2 plot had been reserved for its headquarters in Shenzhen, a sprawling technological center neighboring Hong Kong. It was sold to a local real estate developer, Shenzhen Anhe No. 1 Real Estate Development Co.

Evergrande is one of many Chinese property developers struggling to survive.

The sector, crucial for Chinese growth, has been rendered bloodless by a tightening of financing rules and by the pandemic, which has placed many promoters on the verge of bankruptcy.

Important players in the sector such as Evergrande failed to complete some real estate projects, angering buyers.

China has experienced a boom in the real estate sector since the liberalization of the market in 1998, in a country where the acquisition of property is often a prerequisite for marriage and an investment.

The promoters were able to develop at high speed thanks to bank loans. But their debt has increased so much that the authorities have decided to put a stop to it from 2020.

Real estate, a quarter of GDP in China

Access to credit for developers has since shrunk considerably, while demand for real estate has taken a nosedive in China amid an economic slowdown and uncertainties related to Covid-19 restrictions.

In mid-November the Chinese press unveiled measures taken by Beijing to relaunch the sector, including in particular credit support.

Real estate in China weighs with the construction sector, about a quarter of GDP, and supports an army of low-skilled workers.

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