After Painful Slowdown, a Big Chinese Developer Is Preparing to Buy Land Again
Chinese property developer
Country Garden Holdings Co.
2007 -2.30%
is planning to buy residential land in local government auctions for the first time in more than a year, a further sign that the downturn in the country’s housing market is easing.
The company, one of the largest real-estate developers in China by contracted sales, was hit by a widespread slump in the sector last year that was marked by home sales declines, falling prices and a wave of international bond defaults among its peers.
Most developers without state backing stopped buying new land as a result of the slowdown, shifting their focus to conserving cash, finishing uncompleted projects or selling assets to raise money and pay off debt.
Country Garden, which is based in the city of Foshan in China’s southern Guangdong province, hasn’t bought a plot of land in the public auction market since December 2021. The developer took over some land from existing project partners last year, according to people familiar with the matter. It also spent months battling concerns about its liquidity. Last year, prices of the developer’s dollar bonds slumped to less than 10 cents on the dollar, indicating that investors were pricing in a high chance of default.
Country Garden is now planning to become a land buyer again, its executives said during the company’s annual strategy meeting last week, according to people familiar with the matter. The move comes after Chinese authorities recently dialed back a deleveraging campaign that had squeezed many developers, and issued wide-ranging measures aimed at boosting housing demand and supply.
The company, like many private developers, expanded rapidly in recent years, scooping up land and selling partially built apartments, sometimes within months. Back in 2016, it bought 181 pieces of land in a six-month period. The developer subsequently slowed its rate of land acquisition but still bought 57 plots of land in 2021. That fell to zero in 2022, Wind data shows. Country Garden’s contracted sales shrank 36% last year to the equivalent of $52 billion, company filings show.
Most Chinese developers, including stronger state-owned developers, also bought fewer plots of land last year. Some of the top private developers—including Sunac China Holdings, Shimao Group Holdings and
Seazen Group Ltd.
—halted their land purchases completely in 2022. As a result, China’s overall land sales by area slumped 53% in 2022 to a level below that of 1999.
After the government unveiled its support measures for developers, Country Garden’s dollar bonds rebounded to above 60 cents on the dollar amid a massive rally in property debt that hasn’t defaulted. The company is among the developers that have secured credit support from Chinese state-owned banks. It has also raised money recently via a state-backed bond guarantee program and by selling shares in Hong Kong.
Write to Rebecca Feng at [email protected] and Cao Li at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Chinese property developer
Country Garden Holdings Co.
2007 -2.30%
is planning to buy residential land in local government auctions for the first time in more than a year, a further sign that the downturn in the country’s housing market is easing.
The company, one of the largest real-estate developers in China by contracted sales, was hit by a widespread slump in the sector last year that was marked by home sales declines, falling prices and a wave of international bond defaults among its peers.
Most developers without state backing stopped buying new land as a result of the slowdown, shifting their focus to conserving cash, finishing uncompleted projects or selling assets to raise money and pay off debt.
Country Garden, which is based in the city of Foshan in China’s southern Guangdong province, hasn’t bought a plot of land in the public auction market since December 2021. The developer took over some land from existing project partners last year, according to people familiar with the matter. It also spent months battling concerns about its liquidity. Last year, prices of the developer’s dollar bonds slumped to less than 10 cents on the dollar, indicating that investors were pricing in a high chance of default.
Country Garden is now planning to become a land buyer again, its executives said during the company’s annual strategy meeting last week, according to people familiar with the matter. The move comes after Chinese authorities recently dialed back a deleveraging campaign that had squeezed many developers, and issued wide-ranging measures aimed at boosting housing demand and supply.
The company, like many private developers, expanded rapidly in recent years, scooping up land and selling partially built apartments, sometimes within months. Back in 2016, it bought 181 pieces of land in a six-month period. The developer subsequently slowed its rate of land acquisition but still bought 57 plots of land in 2021. That fell to zero in 2022, Wind data shows. Country Garden’s contracted sales shrank 36% last year to the equivalent of $52 billion, company filings show.
Most Chinese developers, including stronger state-owned developers, also bought fewer plots of land last year. Some of the top private developers—including Sunac China Holdings, Shimao Group Holdings and
Seazen Group Ltd.
—halted their land purchases completely in 2022. As a result, China’s overall land sales by area slumped 53% in 2022 to a level below that of 1999.
After the government unveiled its support measures for developers, Country Garden’s dollar bonds rebounded to above 60 cents on the dollar amid a massive rally in property debt that hasn’t defaulted. The company is among the developers that have secured credit support from Chinese state-owned banks. It has also raised money recently via a state-backed bond guarantee program and by selling shares in Hong Kong.
Write to Rebecca Feng at [email protected] and Cao Li at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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