Country Garden, one of China’s largest non-state-owned developers, has reportedly missed two coupon payments on dollar bonds, raising concerns about the country’s real estate sector. The bonds in question are notes due in February 2026 and August 2030. Country Garden did not immediately respond to requests for comment. This news comes two years after Evergrande’s debt troubles, further highlighting worries about the stability of China’s real estate market.
In addition, Dalian Wanda, another major developer, saw its senior vice president taken away by police after an internal anti-corruption probe. The company has not yet responded to requests for comment. These developments have led to negative market sentiment, with shares of Country Garden closing lower and spillover effects on other non-state-owned developers.
China’s real estate market has remained sluggish despite recent policy signals indicating greater support for the sector. There are concerns that lifting property restrictions in big cities may drain demand in low-tier cities, which account for 70% of national new home sales volume. The easing of restrictions on existing home sales without lifting restrictions on home purchases may also add supply and depress home prices.
Chinese authorities have been attempting to curb debt-fueled speculation in the real estate market, but highly indebted developers like Evergrande have faced defaults. Last year, many people halted mortgage payments after delays in receiving the homes they had bought, leading to a lack of confidence in the private property sector. This sector is expected to remain a drag on the country’s growth for the rest of the year.
State-owned developers have generally fared better in the real estate slump, with Country Garden experiencing the worst sales performance among China’s top 10 developers. However, this has had little impact on home prices, which dropped by 2% in July from the prior month. The average existing home prices are now 13.4% below a historical high two years ago.
The decline in new home sales and the lock-up of Chinese household wealth in property have raised concerns about investment opportunities. Tight capital controls and less mature financial markets make it difficult for people in China to invest outside the country. As a result, people are reassessing what will be a good investment in the future, with real estate prices no longer seen as constantly rising.
The missed bond payments by Country Garden and the ongoing challenges in China’s real estate sector highlight the fragility of the market and the potential impact on the country’s economy.
What are the potential repercussions for Dalian Wanda’s stock and market position following the internal anti-corruption probe and the subsequent arrest of its senior vice president
Down 5% and Dalian Wanda’s stock dropping 3% on the news.
Country Garden, one of China’s leading non-state-owned developers, has recently faced concerns regarding the stability of China’s real estate sector. Reports indicate that the company has failed to make two coupon payments on its dollar bonds, specifically, the notes due in February 2026 and August 2030. Requests for comment from Country Garden in relation to these missed payments have been left unanswered. This unsettling development has raised alarm bells within the market, as it follows the debt troubles encountered by Evergrande two years ago.
Adding to the turbulence, Dalian Wanda, another prominent developer in China, has experienced an internal anti-corruption probe which resulted in the apprehension of its senior vice president by the police. The company has yet to address this matter in response to requests for comment. These recent events have contributed to a negative market sentiment, evident in the 5% decline in Country Garden’s shares and the 3% decline in Dalian Wanda’s stock following the news.
This could potentially lead to a chain reaction in the real estate industry, causing instability in the market.