Evergrande dream may become nightmare for property buyers

evergrande dream may become nightmare for property buyers

Sumary of Evergrande dream may become nightmare for property buyers:

  • SHENZHEN • Sleepless nights are now the routine for Ms Ji Wenchen, six months after she put up a US$100,000 (S$134,000) deposit on a new apartment that has yet to be completed by rattled property giant China Evergrande Group.
  • “My name has not been written on the apartment – that means Evergrande has not handed over my money to the local government.
  • ” Ms Ji is one of tens of thousands of ordinary investors whose financial fortunes are pegged to promised windfalls from China’s largest developer, whose expansion into 280 cities was driven by the same US$300 billion debt binge that has now left it teetering.
  • Analyst Capital Economics estimates Evergrande has some 1.4 million properties that it has committed to complete – around 1.3 trillion yuan (S$271 billion) in pre-sale liabilities as at the end of June.
  • It has also failed to offload assets, such as its Hong Kong headquarters as well as units including China Evergrande New Energy Vehicle Group.
  • “There is no guarantee that the group will be able to meet its financial obligations,” it said.
  • The housing group, which rode the investment wave of the 1990s to capitalise on the country’s wealth boom, is now struggling to meet metrics imposed by Beijing last year.
  • The “three red lines” set limits on borrowing and forced property developers to reduce their liabilities, following years when China let companies borrow heavily in order to expand.

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