Country Garden faces deepening sales decline amid debt woes

Country Garden (HK:2007 ) Holdings Co., a major Chinese property developer, is grappling with intensifying liquidity concerns as its sales continued to plummet in November, signaling further distress in China's real estate sector.

The company reported a 52.3% decrease in contracted sales for November compared to the same month last year, amounting to 3.01 billion yuan ($414 million). This marks a significant downturn from the 31% sales drop observed in October, according to calculations from corporate filings.

Despite the Chinese government's recent efforts to rekindle the housing market by introducing measures such as reduced borrowing costs on existing mortgages, eased purchasing restrictions in major cities, and lowered taxes on home transactions, the residential market has not sustained its brief period of recovery.

The broader economic challenges, including deflationary pressures, have led to continued declines in property sales.

Country Garden's sales have dwindled more sharply than those of its competitors, a trend partly attributed to the company's strategic focus on lower-tier cities and migrant workers in previous years.

In comparison to Country Garden's sales downturn, the 100 largest real estate firms in China experienced a relatively modest average decline of 6.9% in home sales, as tracked by China Real Estate Information Corp.

The Foshan-based developer's financial struggles are mounting. In February, a creditor filed a petition against Country Garden following the company's default on dollar-denominated debt a year prior. Currently, Country Garden is engaged in negotiations with creditors to restructure its debt.

However, the company has missed its own deadline for securing crucial creditor backing for its restructuring plan terms, a development reported last month.

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Source: Investing.com