How the autumn of Evergrande spells doom for China’s property market

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Your help makes all of the distinction. Learn extra The shares of China’s most indebted property large Evergrande have been taken off the Hong Kong inventory market, marking the top of its life as a publicly traded firm that symbolised the rise and fall of China’s actual property trade.

Valued at greater than $50 billion (£37.1bn) at its peak, Evergrande was China’s largest property agency. But it surely turned the poster-child for the issues dealing with Chinese language builders after it collapsed beneath the burden of large money owed in 2021.

“Evergrande's demise highlights that no non-public firm in China is just too huge to fail,” Julian Evans-Pritchard, Head of China Economics at Capital Economics advised The Unbiased.

“However the truth that it has taken this lengthy for the corporate to be delisted underscores the slow-motion nature of China's property adjustment, with state intervention stopping a extra abrupt decision.”

Evergrande’s 2021 default on offshore bonds led to its shares being suspended in January 2024, after a Hong Kong courtroom ordered liquidation when years of restructuring talks failed.

Final week, the inventory alternate confirmed it could cancel the itemizing as a result of the agency failed to satisfy the requirement to renew buying and selling inside 18 months.

It comes as China’s financial system is grappling with a collection of challenges, together with Trump’s tariffs, weak shopper spending, unemployment, excessive native authorities debt and an ageing inhabitants.

Specialists say the collapse of the property sector has hit the nation hardest, because it accounted for roughly a 3rd of China’s financial system and offered essential income for native governments.

“It's a symbolic second provided that Evergrande was the primary main casualty of China's property downturn,” Mr Evans-Pritchard mentioned. “The delisting itself will not have a big effect provided that the corporate's market capitalisation had already collapsed and buying and selling within the inventory was suspended final yr.”

“Though the corporate is being wound down, work on its initiatives is mostly nonetheless ongoing, with native governments stepping in to ensure consumers finally get the properties they purchased.”

<img src="https://static.independent.co.uk/2025/08/25/9/59/2025-08-22T080036Z_882401789_RC2GR5AN3IMR_RTRMADP_3_CHINA-PROPERTY-DEBT-EVERGRANDE.JPG" srcset="https://static.independent.co.uk/2025/08/25/9/59/2025-08-22T080036Z_882401789_RC2GR5AN3IMR_RTRMADP_3_CHINA-PROPERTY-DEBT-EVERGRANDE.JPG?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2025/08/25/9/59/2025-08-22T080036Z_882401789_RC2GR5AN3IMR_RTRMADP_3_CHINA-PROPERTY-DEBT-EVERGRANDE.JPG?quality=75&width=640&auto=webp 640w" loading="lazy" alt="Evergrande’s growth reflected the debt-fuelled nature of China’s property sector, which expanded rapidly following urbanisation and economic reforms in the 1990s" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Evergrande’s progress mirrored the debt-fuelled nature of China’s property sector, which expanded quickly following urbanisation and financial reforms within the Nineteen Nineties (REUTERS) The corporate’s fall was as dramatic as its rise. Its founder, Hui Ka Yan, went from residing a humble rural life to turning into certainly one of Asia’s richest males.

Evergrande’s progress mirrored the debt-fuelled nature of China’s property sector, which expanded quickly following urbanisation and financial reforms within the Nineteen Nineties.

Its 2009 itemizing marked a pivotal second in that surge, with the corporate borrowing an unprecedented $20bn on worldwide bond markets.

However the $45bn fortune that put Mr Hui on the high of the Forbes record of wealthiest males in Asia plummeted to lower than $1bn.

By March 2024, Mr Hui was banned from China’s capital marketplace for life over Evergrande’s overstating of its income by $78bn and he was fined $6.5m.

On the time of its collapse, Evergrande had an empire of 1,300 initiatives beneath growth throughout 280 cities, an electrical automotive enterprise and Guangzhou FC. Earlier this yr, China’s most profitable workforce was itself kicked out of the soccer league as a result of debt.

<img src="https://static.independent.co.uk/2024/01/30/09/SEI189205333.jpg" srcset="https://static.independent.co.uk/2024/01/30/09/SEI189205333.jpg?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2024/01/30/09/SEI189205333.jpg?quality=75&width=640&auto=webp 640w" loading="lazy" alt="Built on more than $300bn (£222bn) of borrowed money, Evergrande struggled to meet interest payments after Beijing introduced borrowing limits for developers in 2020" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Constructed on greater than $300bn (£222bn) of borrowed cash, Evergrande struggled to satisfy curiosity funds after Beijing launched borrowing limits for builders in 2020 (AFP by way of Getty Pictures) Constructed on greater than $300bn of borrowed cash, Evergrande struggled to satisfy curiosity funds after Beijing launched borrowing limits for builders in 2020.

Deep reductions on properties failed to stop defaults on abroad debt, in the end triggering liquidation.

The disaster wiped greater than 99 % from it inventory market valuation.

Earlier this month, liquidators Alvarez & Marsal mentioned they've to this point recovered simply $255m of belongings, together with a Claude Monet portray, out of the $45bn debt.

In addition they launched motion towards the agency’s auditors PwC China after authorities final March mentioned it authorized accounts regardless of inflated revenues in 2019 and 2020.

The housing disaster in China is way from over, with property corporations like Nation Backyard nonetheless battling large debt. Earlier this month China South Metropolis Holdings turned the most important developer to be pressured into liquidation since Evergrande.

“We predict the property downturn is prone to proceed for at the very least a pair extra years, given that it'll take time for the market to totally take in extra provide because the backlog of unfinished initiatives are accomplished,” added Mr Evans-Pritchard.

Beijing launched a spread of measures to revive the housing market and shopper spending, together with incentives for brand spanking new householders, inventory market help, and purchases of electrical vehicles and family items.