The Chinese Communist Party has emphasized the need for the real estate market to “stabilize after a decline” in multiple meetings, but data released by the National Bureau of Statistics of China on Monday, March 17th, shows that the real estate market indicators in the first two months of this year continued the downward trend from 2024, falling short of stabilizing. Furthermore, real estate developer “Evergrande China” announced on Monday that the company expects to incur losses between 25.5 billion to 26 billion yuan in 2024.
The Chinese authorities have been using the rhetoric of continuing to “promote the stabilization of the real estate market after a decline” from the Central Political Bureau meeting in September 2024 to the Central Economic Work Conference at the end of the year, and most recently during the “Two Sessions” of the CCP. However, the data released by the National Bureau of Statistics on Monday shows that not only has the real estate market not stabilized after a decline, but it is also continuing to deteriorate.
According to the data from the National Bureau of Statistics of China, in the first two months of 2025, the national real estate development investment was 1.072 trillion yuan, a decrease of 9.8% year-on-year; the sales area of newly built commercial housing was 107.46 million square meters, down by 5.1% year-on-year; the sales revenue of newly built commercial housing was 1.0259 trillion yuan, down by 2.6%. By the end of February, the sales area of unsold commercial housing was 799.1 million square meters, an increase of 5.1% year-on-year.
In addition, the National Bureau of Statistics of China also released information on the price changes of commercial residential properties in 70 major and medium-sized cities in February.
The data shows that the selling prices of new homes in first-tier cities decreased by 3.0% year-on-year. Among them, Beijing, Guangzhou, and Shenzhen decreased by 5.5%, 7.8%, and 4.4% respectively; the selling prices of second-hand homes decreased by 4.9% year-on-year, with Beijing, Shanghai, Guangzhou, and Shenzhen decreasing by 2.9%, 2.1%, 9.4%, and 5.3% respectively.
Based on the real estate data released by the National Bureau of Statistics of China in 2024, real estate development investment in the country was 10.028 trillion yuan, a decrease of 10.6% compared to the previous year; the construction area of residential buildings by real estate development enterprises was 7.33247 billion square meters, a decrease of 12.7% compared to the previous year; the sales area of newly built commercial housing was 973.85 million square meters, down by 12.9% compared to the previous year; the sales revenue of newly built commercial housing was 967.5 billion yuan, a decrease of 17.1%.
In December 2024, the prices of new homes in various cities dropped month-on-month, with declines in both first-tier and third-tier cities. The prices in second-tier cities only slightly increased by 0.1%, showing a downturn in the rate of increase. As for second-hand homes, prices in all cities experienced a month-on-month decline, with a widening year-on-year decrease, marking the first overall decline since October 2014.
Real estate developer “Evergrande China” announced on Monday, March 17th, that due to a decrease in income, it expects to incur losses between 25.5 billion and 26 billion yuan in 2024, a significantly higher loss than the 7.97 billion yuan recorded in the 2023 report.
In its profit warning, “Evergrande China” stated that the losses for 2024 were primarily due to the downturn in the market, a significant reduction in company turnover, and provisions for asset impairments and liabilities.
In the financial field, provisions are funds set aside by companies to handle potential asset losses. Common types of provisions include bad debt provisions, inventory depreciation provisions, loan loss provisions, and asset impairment provisions.
On January 10, 2025, Evergrande China listed on the Hong Kong Stock Exchange announced that it had received a winding-up petition from China Citic (Hong Kong) Asset Management Co., Ltd in Hong Kong, with a hearing scheduled for March 19, 2025.
On January 8, the bond trustee Guotai Junan Securities Co., Ltd disclosed the interim entrusted management report of the bonds of Evergrande Real Estate Group Co., Ltd.
According to the announcement, as of November 30, 2024, the outstanding principal amount of overdue loans was 115.5 billion yuan. Among them, overdue bank loans amounted to 23.415 billion yuan, overdue non-bank financial institution loans amounted to 74.109 billion yuan, and other interest-bearing debts overdue amounted to 17.86 billion yuan.
In recent years, the scale of bond issuance by Chinese real estate companies has been consistently decreasing. According to the Securities Times, as of March 14th, this year’s total bond financing in the real estate industry since the issuance date amounted to 98.843 billion yuan, a 15.25% decrease compared to the same period in 2024.