As the impact of the sluggish real estate market continues, China’s Evergrande Group announced on Tuesday, August 20, that it is expecting a net loss attributable to shareholders of approximately 15 billion Chinese yuan (about 2.1 billion US dollars) for the half-year period ending on June 30.
The troubled real estate giant attributed its losses in the first half of this year to the downturn in the real estate market, significantly reduced turnover, as well as factors such as making provisions for possible liabilities.
This marks the third consecutive half-year of losses for Evergrande Group. For the half-year period ending on June 30, 2023, the net loss attributable to shareholders was 15.37 billion Chinese yuan (about 2.15 billion US dollars).
In a statement, the company mentioned that it expects to release its half-year financial results by the end of August or earlier.
For decades, the real estate industry has been a key driver of economic growth in China. However, since 2021, the real estate sector has been facing multiple crises. Several major real estate developers have defaulted, with companies such as Evergrande even being ordered for liquidation by a Hong Kong court.
Due to a series of support policies from the Chinese Communist Party failing to stabilize prices and restore confidence in the struggling real estate industry, China saw the fastest decline in new home prices in nine years in July.
On the evening of July 9, China’s real estate giant Vanke disclosed its performance forecast, expecting a net loss of 7 to 9 billion Chinese yuan (approximately 980 million to 1.26 billion US dollars) for the first half of this year. Country Garden had to postpone the release of its financial results for the 2023 fiscal year.
Nomura economists warned in a report on August 1 that the Chinese real estate industry has yet to hit rock bottom. Despite some key indicators showing positive signs, the crisis is far from over. Nomura cautioned that aside from the accelerated decline in new home sales, new adverse factors have emerged that could further dampen housing demand. The recent lowering of mortgage rates in Beijing, the latest move to stimulate demand, is seen as insufficient to address the crisis.
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