China’s Top 10 Real Estate Developers See 33% Year-on-Year Decline in Deliveries in the First Half of the Year

On July 11th, data released by China’s institutional market research institute CICC showed that in the first six months of this year, the number of housing units delivered by the top ten real estate companies in China decreased by 33% compared to the same period last year. Industry insiders from real estate companies stated, “The lower-than-expected sales in the housing market in the first half of 2024 are the main reason why real estate companies are unable to deliver.”

According to the data released by CICC on “Top Ten Real Estate Companies in Terms of Delivery Scale in the First Half of 2024,” the total number of units delivered by the top ten companies in the first half of this year was 675,900, a 33% decrease compared to the same period last year. Additionally, in the first half of 2024, the threshold for the top 10 companies on the delivery list was only 32,000 units, a decrease of 23,000 units compared to the previous year.

The data from CICC also showed that among the top ten real estate companies in terms of deliveries in the first half of 2024, only two companies, China Overseas Land & Investment and New World Development, saw an increase in deliveries compared to the same period in 2023, while the remaining eight companies all experienced a decline in deliveries.

According to Caixin’s report, six of the top ten real estate companies in terms of deliveries in the first half of 2024, including Country Garden, Greenland Holdings, Sunac China Holdings, Longfor Group, Evergrande Group, and China South City, publicly announced their delivery targets for 2024. Among them, only Longfor Group achieved half of its target in the first half of the year, while the delivery progress of the other five companies fell short of expectations.

In response to this, an insider from a leading real estate company analyzed to Caixin, “The lower-than-expected sales in the housing market in the first half of 2024 are the main reason why real estate companies are unable to deliver.”

CRIC, a market institution, stated in a report on July 1st that in the first half of 2024, the total transaction amount of the top 100 real estate companies was 1.85183 trillion yuan, a 39.5% decrease compared to the same period last year. In the same period from 2021 to 2023, the total transaction amounts for the top 100 real estate companies were 6.14991 trillion yuan, 3.05646 trillion yuan, and 3.06202 trillion yuan, respectively.

For real estate companies, their sources of funding mainly come from sales proceeds of commercial housing, self-raised funds, and loans from financial institutions. According to data from China’s National Bureau of Statistics, in the first half of 2021, the proportions of these three types of funds for real estate companies were 57%, 30%, and 13%, respectively.

Additionally, data from China’s National Bureau of Statistics shows that in the first five months of 2024, real estate companies had funds in place amounting to 4.2571 trillion yuan, a 24.3% decrease compared to the same period last year. Among them, the prepayment and deposits for commercial housing were 1.2584 trillion yuan, a 36.7% decrease, and individual mortgage loans were 619.1 billion yuan, a 40.2% decrease. The proportion of sales proceeds of commercial housing in the funds in place for real estate companies decreased to 44%.

The sluggish real estate market and declining sales volumes have led to a decrease in proceeds, especially affecting the cash flow of large-scale leading real estate companies, causing insufficient liquidity for these companies. For example, Country Garden only achieved a sales amount of 31.61 billion yuan in the first half of 2024, a 79.3% decrease compared to the same period in 2021.

Several industry experts analyzed to Caixin that for Country Garden, “there is no way to make up for the funding gap caused by the decline in sales proceeds.” Although Country Garden has always emphasized putting “delivery guarantee” as a top priority, its progress is bound to be affected in such a tight financial chain situation.

The emergence of a large number of unfinished properties in China has impacted millions of people and families on the mainland, leading to widespread grievances among the public. The Chinese Communist Party, fearing public dissent, has been pressuring real estate companies to fulfill their delivery obligations. However, the market is contradicting the Communist Party as the real estate sector continues to struggle, making it difficult for companies to operate under such financial constraints.