![]() They would be fine.īut the real estate industry overall is too big. Goldman estimates the Chinese real estate sector at $62 trillion and 29% of the country’s GDP. Most of the banks lending money to Evergrande are Chinese, aka state-owned, and can be patched-up by the government. ZeroHedge has a solid article (below) on Evergrande’ s and the sector’s situation. It owes money to 171 domestic bank and 121 international firms. On September 14th, Evergrande said it hired restructuring experts to “ explore all feasible solutions”. ![]() Meanwhile, lenders were told to reduce lending to the company. Evergrande was told to put its debt in order. In August, the government called the management to a meeting. Multiple construction projects have been halted.Įvergrande then sold non-core businesses, but the proceeds have been insufficient – buyers are waiting for the firesale. There are billions of dollars of outstanding bills owed to contractors. That could not have been a long term solution. Lawsuits from home buyers waiting for apartment completion pilled up. The company initially started to sell its new apartments at a discount. Last year, the government started to reduce the growth of the property market by restricting developer’s access to financial markets. 1.6 million individuals are now waiting for delivery from 1,300 construction projects across the country. Most of the firm’s cash comes from apartments pre-sold to individual buyers. It aggressively expanded into real estate, which is now its core activity. Forbes ranks its founder’s wealth at $10bn (despite the recent stock fall). Most financial analysts aren’t optimistic about Evergrande.Įvergrande is a sprawling conglomerate ranging from electric cars to wealth management, as well as food and drink manufacturing. It is expected to default on bond payments in the coming days.Įven with ‘only’ $300 bn of debt, the developer is emblematic of the entire $62 trillion Chinese real estate industry. Evergrande is China’s second largest real estate.
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