BEIJING – China’s heavily indebted property developer Country Garden, one of the country’s biggest real estate companies, has said it is again defaulting on some of its payments, reported dpa news agency.
Country Garden said in a statement to the Hong Kong Stock Exchange on Tuesday that it cannot make a payment of 470 million Hong Kong dollars (about US$60 million).
Further payments could probably not be made either, it said. The company from Foshan in southern China had missed payments last month.
With thousands of projects and about 70,000 employees, Country Garden is one of the largest property developers in China. At the same time, the company is one of the most indebted in the industry, with the equivalent of almost US$190 billion in liabilities.
It is not the only major developer with debt problems in China. The Evergrande Group is likewise heavily in debt and recently made headlines because of investigations against its board of directors.
The real estate sector in the world’s second-largest economy is in a severe crisis because demand in the housing market has slowed. The government has tried to counteract the trend with tax breaks and more relaxed regulations for buying flats in larger cities.
Country Garden said that between January and September this year, the group’s sales fell by 43.9 per cent compared to the same period last year. In September, the company took in as much as 80.7 per cent less through sales than in the same month last year.
Country Garden said it hired external advisers to review the company’s finances and formulate a solution. Observers saw this as the first important step in a restructuring of the group. On the Hong Kong stock exchange, the shares fell by more than 4 per cent by midday. – Bernama
