In the past two years, Chinese real estate companies have been continuously facing bankruptcy, leading to a continued market downturn. In January this year, the total sales of China’s top 100 real estate companies decreased by 16.5% year-on-year. To reduce housing inventory, real estate developers in various regions have launched promotions during the Chinese New Year holiday to stimulate new home purchases. Experts believe that despite exhausting all measures to support the real estate market, the Chinese Communist Party (CCP) has failed to improve the situation. It is predicted that 2025 will be a year of catastrophic collapse for the Chinese real estate market.
According to data released by the China Real Estate Index Institute, in January this year, the total sales of the top 100 real estate companies in China amounted to 235.03 billion yuan, a 16.5% decrease compared to the previous year. In January, there were five companies with sales exceeding 10 billion yuan, down by 2 from the same period last year, while eight companies reached sales of 5 billion yuan, remaining consistent with the previous year.
In order to clear housing inventory, multiple provinces and cities in China launched promotional campaigns during the Chinese New Year holiday. Since January, cities such as Nanjing, Chongqing, Chengdu, Hefei, Changsha, Zhengzhou, Shandong, and Fujian have introduced various promotions, including offers like home appliance gifts, free trips, waived property fees, and complimentary parking spaces, to incentivize home buying.
However, these promotions have not yielded the desired results. Data from the China Real Estate Index Institute shows that in January, due to the Chinese New Year holiday, there was a slight decrease in the transaction volume of new and existing homes in key cities.
Chinese financial investment expert Zhai Shanying recently mentioned on his program that 2025 will be a year of frenzied collapse for the Chinese real estate market. Despite utilizing all available resources to support the real estate industry from 2022 to 2024, including intervention from the central to local levels and support for both state-owned and private enterprises, the market still could not sustain itself. The support system is on the verge of collapse, leading to significant repercussions.
Companies leading the Chinese real estate rankings are currently undergoing bankruptcy processes or have already gone bankrupt. Numerous real estate companies have faced liquidation requests, with examples such as Sunac China revealing a debt involving 30 million USD in principle and accrued interest due to a liquidation proposal from Cinda International Holdings Limited in China. Meanwhile, the World Trade Group announced receiving a liquidation request involving an outstanding amount of approximately 258 million yuan.
Incomplete statistics indicate that 55 listed real estate companies have faced defaults on overseas debts, including prominent names like Country Garden, Sunac China, Xuhui Holdings Group, Longfor Group, and World Trade Group, with 28 companies receiving liquidation notices. Most of these requests have been withdrawn or postponed, with very few companies like China Evergrande and Jiayuan International actually facing liquidation rulings.
Professor Xie Tian from the School of Business at the University of South Carolina Aiken expressed to media outlets that “even the top ten real estate companies in China are facing bankruptcy liquidation this year, indicating that China’s real estate industry has reached an irredeemable state.” He further added that “although the CCP has made several attempts at rescuing the real estate industry and invested in some companies, the actual impact on the overall situation has been minimal.”
For the past three to four decades, the real estate sector has been a pillar of China’s economy under the CCP’s rule. However, following the economic decline of the Chinese political system post-pandemic, the real estate market has also collapsed.
A Beijing resident, Gao Lixin (pseudonym), revealed his sister’s plight, where she bought a 140 square meter apartment in Yanjiao for 2.6 million yuan in 2017, that she can now barely sell for 800,000 yuan, incurring a loss of over two-thirds. Due to inconvenience in commuting, as it takes a two-hour bus ride to reach, the apartment is rented out for 1,500 yuan per month. In addition to this, annual property fees amount to over 4,000 yuan, with an additional 4,000 yuan for heating costs. Hence, during the Lunar New Year, the family avoids discussing the apartment to prevent upsetting his sister.
Xie Tian believes that the Chinese real estate industry has yet to hit rock bottom and continues to decline. If most cities in the country resemble the situation in Hegang, Heilongjiang Province, the market has likely reached its lowest point. The timing for this bottoming out phase is fast approaching.
In recent years, due to the decline in the mining and industrial sectors as well as population outflux, cities like Hegang, once bustling with coal industry activities, have become China’s most affordable real estate market. With the ongoing crisis in the Chinese real estate sector, more and more mid-sized cities are experiencing a trend towards “Hegangization” in property prices.