China's biggest real estate developer by sales, Country Garden, announced a loss of more than 800 million euros for the whole of 2022 on Thursday, its first result in the red for 15 years.
Real estate is weakened in China by the economic slowdown and by a tightening of regulations which has considerably reduced access to credit for developers since 2020.
The poor financial health of sector heavyweight Evergrande, on the verge of bankruptcy, is also chilling buyers and contributing to further aggravate the crisis in the sector.
In this context, Country Garden recorded some 6 billion yuan (more than 800 million euros) in losses last year, he said in a statement to the Hong Kong Stock Exchange where it is listed.
This is the first time since its IPO in 2007 that the promoter has recorded losses.
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Real estate boom since the 90s
In 2021, Country Garden had still made a profit of 26.7 billion yuan (3.5 billion euros at the current exchange rate).
2022 was a year like no other.
China's real estate sector has experienced an unprecedented environment, which can be described as a severe winter
,” Country Garden said.
The group, which has long been reputed to be financially sound, has been caught up in recent months by the real estate crisis in China.
Country Garden had already announced last August a 96% drop in its half-year profits.
China has experienced a boom in its real estate sector since the liberalization of the market in the late 90s, in a country where the acquisition of property is often a prerequisite for marriage and an investment.
But to reduce the sector's indebtedness, the Chinese authorities reduced from 2020 the conditions of access to credit for promoters.
Many of them have since struggled to survive, while the uncertainties linked to Covid-19 and repeated confinements in China last year have caused demand for real estate to plummet.