Over two dozen Chinese real estate companies failed to meet the March 31 deadline to file their audited financial reports for the 2021 year, and for the companies that did file, the results reflected a year of challenges, reports the Wall Street Journal.
China Vanke Co, one of the giants in Chinese real estate, reported a 46% decline in net profits, the third time ever since the company went public in 1991; the chairman, Yu Liang, said it was a “wake-up call” and apologized to shareholders.
The shortcomings of Vanke, rooted in a model based on “aggressive investments with over-optimistic judgment of the market,” according to Yu, are reflective of the approaches and practices of the real estate market in China that led to Evergrande’s collapse and the subsequent turmoil.
Analysts believe that the growth the real estate industry has experienced has come to an end, with potentials for the market to worsen before it begins true recovery. Collectively, the 100 largest real estate developers had a 53% drop in sales in March compared to the same time last year and is the sharpest loss since last summer and the ninth month of losses in a row.
The COVID-19 outbreak that has impacted Shanghai, Shenzhen, and other major cities is expected to have heavy repercussions as well.
“In our view, the resurgence of Covid-19 will cripple the property market recovery given China’s zero-tolerance policy,” Shu Hui Woon, a credit analyst at Lucror Analytics, said.
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