The boss of Evergrande, the Chinese developer with astronomical debt, is under house arrest, Bloomberg said Wednesday, at a time when the group faces increased pressure from its creditors. Evergrande, whose descent into hell regularly makes the headlines, had at the end of June a colossal slate estimated at $ 328 billion (307 billion euros).
Billionaire Xu Jiayin (also known as Cantonese Hui Ka Yan) was taken away earlier this month by authorities, Bloomberg reports, citing unnamed sources. Evergrande did not immediately react. In mid-September, the group announced the arrest of employees in one of its subsidiaries. The statement did not specify their number or what they are accused of. According to Caixin, a well-known business media, two former Evergrande executives have also been detained.
The real estate sector in China has experienced tremendous growth in recent decades, in a country where the purchase of a property even before its construction made it possible to finance other projects. But the indebtedness of the groups has reached such levels that the authorities have decided to put a stop to it from 2020. Since then, access to credit has been considerably reduced for these groups, some of whom are now struggling to complete the projects, fueling a crisis of confidence with potential buyers that is weighing down prices.
This unprecedented crisis in real estate has won in recent months the other heavyweight of the sector, Country Garden, long considered financially solid. On Monday, a subsidiary of Evergrande announced that it was unable to repay interest on a loan, increasing pressure on the group before a hearing scheduled for late October of creditors of Evergrande in court in Hong Kong.