2023-08-26 03:01:00
EvergrandeApply for case protectionbankruptIn the United States, while the real estate crisis in China is raging By filing for bankruptcy protection under the US law, Chapter 15 with the New York City Court on August 17, 2023, which will allow Evergrande to protect its assets in the United States.
The companydefault on paymentThe big time in 2021 and trading in this company’s shares has been suspended since March 2022. The company has liabilities of up to $ 300 billion, or more than 10.6 trillion baht, or about 3 times the budget of Thailand. or nearly two-thirds (61%) of Thailand’s gross national product.
Therefore, this company has a very large size. investors and executives of this company Allowing the company to grow to this extent is considered something that should not happen.
view inEvergrande website The company has developed a total of 1,300 real estate projects in more than 280 cities across China. Moreover, it also operates other businesses such as electric vehicles and football clubs.
Including all 860 affiliated companies and has developed housing for 12 million Chinese people together. If one house has 3 people, it is equivalent to building about 4 million units.
In 2020, Evergrande has a total revenue of 2.475 trillion baht, or almost two-thirds of the Thai national budget. but has a net income of 39,411 million baht, assets of 11.229 trillion baht and capital of 1.7 trillion baht, and since 2021, revenues have decreased respectively until the end of 2022
Although the income was 1.122 trillion baht, it was considered reduced by more than half and had a loss of -516,860 million baht, with assets reduced to 8.971 million baht and a negative capital of -2.923 million baht.
The BBC analyzed Evergrande’s bankruptcy will have three major effects:
1. A large number of people buyreal estatefrom Evergrande before the start of construction They have already paid the deposit and may have lost the money. If the company goes bankrupt
2. Many companies have done business with Evergrande, such as design companies, construction companies. and various material sales companies which would risk bankruptcy as well, and
3. Effects onChina’s financial system
However, in China, he refused to sell the paper. The construction must reach a certain level before it can be opened for sale. And there is protection for the home buyer’s down payment according to the law to take care of the interests of the parties (Escrow Account).
Therefore, it is believed that the direct impact on the housing market will not be large. And it may even be good to have cheaper properties for people to choose to buy, butfinancial institutionAnd activities in Evergrande’s supply chain will be directly affected.
In China, there are over 50 million units of completed but uninhabited homes, a development that has not been well-regulated in recent times. There are about 1.2 million unoccupied houses in Thailand, 1.5 million in South Korea and 8.5 million in Japan.
These houses, if able to be re-translated, can be sold. It will make people who buy a house to benefit. It’s a great way to help solve the debt.
From the observation of investment purchasesreal estateofChinese investorOverseas, it appears to be shrinking globally. In Thailand, Chinese home purchases could shrink in 2023. In Cambodia, especially Dara Sarko, investment projects of Chinese investors has been slow in Sihanoukville since the return home of Chinese investors during COVID-19. and a little before At the moment there is not much return to Cambodia.
During August 16-18, 2023, the author traveled to explore real estate in Vientiane. It appears that various investment projects China’s land lease for 70-99 years has slowed down. Some places announced to find other investors to join together to help develop. which is something that has never been done before Because Chinese investors often come to invest themselves.
The author also found a beautiful and grand office building in China. who are about to announce for sale to bring money back to the country As is the case in Thailand, Chinese tourists and investors are slowing down. The expectation that Chinese businessmen will come in a lot like before the COVID-19 period. therefore has not yet come back to see
Lessons from China’s Evergrande remind us that
1. The state should not allowland developerBorrowing too much money to be able to pay off debt for such an endless expansion Business growth is unreasonable as it should be. inevitably produces bubbles and at risk of bankruptcy This has happened in almost all crises around the world. The government should control financial discipline well.
2.Measures LTV (Loan to Value) is important At the moment, we should require those interested in buying a house to have a real down payment of at least 15-20% of the house value. and has an unbiased home valuation Don’t let the bank assess the house yourself, lend it yourself, which brought about the 1997 crisis.
This LTV measure may cause land development companies “I can’t breathe” but it’s still better than letting it become “Evergrande 2” now, some of the listed land development companies are in bad shape.
3. should bringMeasures to take care of the benefits of the parties to the contract (Escrow Account) come and use
Thailand has Escrow Act B.E. 2551 But it is a “very bad” law because there is a law like there is no law.
Because letting home buyers and home sellers agree that Will there be a neutral agency to collect our down payment or not? (To prevent entrepreneurs from taking money “Elui scurvy” misused)
It appears that large entrepreneurs say no. because he already has a good reputation As for the small ones, don’t take it because it will be a big disadvantage. Escrow Account fees must be paid, agreed in Thailand, therefore not strictly enforced.
Having an Escrow Account is a good thing. That will make home buyers confident that buying a house or a condominium will definitely get the property And the down payment will be returned if the land development company goes bankrupt first. On the other hand, Escrow Account is a benefit to the land developer.
Because when home buyers are confident in buying will flock to buy Making the business better. Not having an Escrow Account is only a big advantage. only famous It does not promote entrepreneurs at the level of SMEs in any way.
Crisis can be prevented and resolved. By adhering to the interests of the people, consumers is important.
Foreign real estate column
Dr. Sopon Pornchokchai
Executive Chairman Thai Real Estate Research and Valuation Information Center
Agency for Real Estate Affairs Co., Ltd.
www.area.co.th
1693023455
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