The Chinese real estate giant Evergrande is facing delisting from the Hong Kong Stock Exchange next month after the liquidation order issued by the Hong Kong High Court has been in effect for over 18 months. Analysts believe that the prolonged downturn in the Chinese real estate market, coupled with the bankruptcy of the Chinese Communist Party’s “stabilize and revive” policy, has led to further declines in housing prices. The structural shift in demand is expected to dim the prospects for debt restructuring of other defaulting property developers in China.
Evergrande failed to provide a specific plan for overseas debt restructuring, leading to the liquidation order by the Hong Kong High Court on January 29, 2024. On the same day, Evergrande also halted trading on the Hong Kong Stock Exchange. According to the regulations of the Hong Kong Stock Exchange, a company must be delisted if it remains suspended for 18 consecutive months. Evergrande is now facing delisting from the Hong Kong Stock Exchange.
Reuters reported on Wednesday (July 30) that restructuring advisors indicated that developers like Evergrande are facing cash flow deterioration, with bondholders refusing to bear greater investment losses, thereby delaying negotiations between Evergrande and creditors.
The South China Morning Post reported on Wednesday that independent analyst Zheng Zhongji stated that it is not surprising for Evergrande to be delisted since the company has massive debts and poor asset quality, making it unable to provide a viable restructuring plan. Brock Silvers, Chief Investment Officer of private equity investment firm Kaiyuan Capital in Hong Kong, echoed Zheng’s views, saying that Evergrande may not continue to be listed as there is little evidence that any reasonable restructuring could bring viable business to shareholders.
Evergrande, the world’s most indebted real estate developer, has debts exceeding $300 billion, with its market value once reaching as high as HK$400 billion ($51 billion) but shrinking to HK$22 billion during the trading suspension.
In January this year, Evergrande stated that a Hong Kong court had ordered the winding-up of its key offshore subsidiary, CEG Holdings BVI, in an attempt to recover funds from this heavily indebted real estate company.
Furthermore, Evergrande’s liquidators, Edward Middleton and Tiffany Wong of Alvarez & Marsal Asia, have been working to recover at least a portion of the owed entitlements to creditors and the $6 billion in compensation and dividends paid to Evergrande’s executives.
Reuters noted that Evergrande’s delisting would cast a shadow on other developers who are striving to maintain operations by restructuring debts with the support of creditors to avoid being dragged into liquidation lawsuits.
According to the “2025 China Corporate Default Overview” released by S&P Global in April, the scale of offshore bond maturities this year is up to $104 billion, with real estate companies accounting for $32 billion, a significant portion of which may enter restructuring processes.
Data from investment platform FSMOne Hong Kong shows that since 2021, over $140 billion (over 70%) of defaulted USD bonds in the Chinese real estate sector are still in various stages of restructuring.
Another property developer, Country Garden, defaulted on $14 billion of offshore debts in 2023 and is currently striving to obtain the approval of creditors for its debt restructuring plan before the liquidation hearing on August 11. Other developers such as Greentown China and Agile Properties initiated restructuring processes in 2023 and 2024, respectively, but have yet to disclose detailed restructuring plans.
Glen Ho, Director of Corporate Transformation and Restructuring at Deloitte China, does not hold a positive view on debt restructuring for defaulting property developers. He stated that “there is no light at the end of the tunnel,” and “companies are hoping to delay the effective date of restructuring in exchange for more breathing room, but funds cannot be created out of thin air.”
Analysts from ANZ Bank stated in a report in June that due to structural shifts in demand, Chinese real estate construction is expected to further decline by 30% by 2035, which could cast a long shadow over debt restructuring efforts in the medium to short term.
It is worth noting that experts believe that defaulting Chinese property developers may need to undergo multiple rounds of debt restructuring to sustain operations. Evergrande’s restructuring advisors anticipate that in the absence of improvement in housing sales outside major Chinese cities and the lack of smooth financing channels, some developers, especially private ones, will undergo not just one round but possibly two rounds of debt restructuring.
According to the aforementioned report by S&P Global, close to one-third (30%) of domestic bond defaults since 2020 re-defaulted after undergoing restructuring. The uncertain macroeconomic outlook and persistently unanticipated real estate crisis in 2023 increased the number of re-defaults and caused many restructuring cases to stall in 2024. The imposition of tariffs by the United States amplified this uncertainty.
Una Ge, a partner at the consulting firm AlixPartners in Hong Kong, stated, “There is no single playbook; each restructuring plan must be tailored based on the company’s unique capital and creditor structure.” “For private developers, the obvious trend is the need to continue deleveraging because one round of restructuring is often insufficient to sustain their survival.”
Despite repeated attempts by the Chinese authorities to stabilize the market, Chinese real estate investment in the first half of this year still dropped by 11.2% year-on-year, with real estate sales area decreasing by 3.5% and new construction area dropping by 20%.
Analysts at Goldman Sachs stated in a report in June that the long-term downturn in the Chinese real estate market may persist until 2027, with actual housing prices possibly falling by another 10%.
In 2024, the Chinese authorities introduced many policies aimed at “stabilizing and reviving” the real estate market, such as “four cancellations, four reductions, two increases.” In 2025, further policies were implemented in financial support, advancing urban renewal, and strengthening housing security.
Chinese expert Wang He wrote in Dajiyuan that the Chinese Communist Party’s “stabilize and revive” policy for the real estate market has failed. The bubble accumulated by the abnormal development of real estate over the past few decades must be cleared in the market. Expecting to change the overall situation of the real estate market through policies without allowing market clearing is simply wishful thinking.