Beijing [China], July 19 (ANI): The Chinese Communist Party’s (CCP) third plenum was concluded this week without producing any relief for the country’s ailing real estate sector, as the troubles include dwindling contracted sales, Nikkei Asia reported.
These contracted sales are a source of revenue that developers need to raise funds for their projects and, more crucially, pay their mounting debts in the current market.
In 2021, the industry’s 19 top-listed developers achieved contracted sales of over 100 billion yuan (USD 13.8 billion), according to the current exchange rate.
China’s Evergrande Group, now facing financial problems, topped the list at the time. But in the first six months of 2024, this 100 billion yuan club is down to just five members, down from 19, all of whom are either owned by or backed by the government.
Poly Developments and Holdings Group, which is a government-owned developer with a military background, now has 173 billion yuan in contracted sales. It is followed by China Overseas Land & Investment (COLI), a unit of China State Construction Engineering Corp. (CSCEC), with 148 billion yuan. Both of which are directly owned and controlled by the government of China, the Nikkei Asia report stated.
Among the top five, China Vanke in the third position is not considered state-owned, but it is backed by the government, as its top shareholder is Shenzhen Metro, which holds a 27 per cent stake in a local government-controlled entity.
The report also claimed that the phenomenon known as guojin mintui, meaning “the state advances as the private sector recedes,” is at play in the real estate sector of China.
The credibility and stability provided by the state are assisting some companies in one way or another. This is reflected in the funding provided by the state-dominated banking sector and the consumer mindset of depending on the state in times of economic distress.
However, with the industry in dire condition for over three years. Now even government-owned or affiliated entities are not immune to losses. Currently, Poly Development is expecting its net profit to drop for the first half by 39 per cent. China Vanke is expecting its first-ever loss since its listing since 1990.
Jizhou Dong, head of Chinese property sector research at Nomura, said there has not been any meaningful turnaround in the property sector.
“There hasn’t been any meaningful turnaround in the property sector, as indicated by shrinking sales and falling prices. It doesn’t really matter whether it’s a state-owned enterprise or not. The only interest in these guys’ mainland property shares is coming from investors who have to allocate a proportion of their assets to property,” Nikkei Asia quoted Dong as saying. (ANI)
This report is auto-generated from ANI news service. ThePrint holds no responsibility for its content.