The real estate market appears to be shaky as a result of China’s Evergrande crisis!
The Evergrande Real Estate Group is regarded as one of China’s largest property developers. On the Fortune Global 500, it was ranked 122nd. According to reports, the company is planning to sell a significant portion of one of its businesses. This deal appears to be worth more than $5 billion. However, if the deal goes through, it could be the largest asset sale in the history of the company.
The Journey of Evergrande
Xu Jiayin founded Evergrande Real Estate in 1996, and the company now owns over 1300 projects in over 280 Chinese cities. Evergrande has formed strategic alliances with over 860 well-known global corporations. Its secret to success is that it is constantly striving for product excellence and has a strategic plan in place to create high-quality, low-cost products. It is also specialized in developing fully decorated houses, assisting over 12 million homeowners in building their dream homes, including using online marketing to ensure that hardly a house returns.
Evergrande, once one of China’s leading real estate companies, is now in one of the country’s most dire financial situations, struggling to stay afloat with more than $300 billion in debt. According to reports, Evergrande requested that trading in its Hong Kong shares be halted on Monday in order to await the announcement of a major transaction.
According to China’s Global Times, Hopson Development reportedly purchased a 51 % stake in the real estate business for more than HK$40 billion ($5.1 billion), citing undisclosed news reports.
Other countries should be concerned!
This crisis has taken global markets by surprise, and strategists believe it will have far-reaching consequences for the global economy. There appears to be genuine concern that China’s slowing economy will have a negative impact not only on Asia but also on the global economy, and that this will eventually spread to other economies because China’s market is so large that it can easily affect the entire world.
According to Williams of Capital Economics, about 1.4 million landowners have already paid deposits and are awaiting the delivery of Evergrande properties. He stated that the economist panel cannot predict whether property owners will be able to build the homes, but that it appears unlikely, noting that some homes have been under construction and are nearing completion.
The danger is that if one of the largest property companies has a problem, real estate values will suffer as well, causing the real estate market to collapse. Because the Chinese consumer is such an important part of the economy, a drop in housing prices could affect consumer spending.
A loosening of China’s import industry, as well as a slowing of demand for all types of raw materials, could put pressure on other regional and global markets.
(Edited By Nandana D Choudhury)