Country Garden’s sales slump worsens in January adding to woes

Country Garden’s (2007) sales slump dragged on in January, as new residential transactions countrywide resumed falling on weak sentiment.

Contracted sales dropped 59 percent from a year earlier to 2.26 billion yuan (HK$2.41 billion), following a 51 percent year-on-year decline in December, according to Bloomberg calculations based on corporate filings.

Country Garden’s slide in home sales substantially surpasses the 3.2 percent posted by the 100 biggest real estate companies tracked by China Real Estate Information. The market is dented by weak domestic demand and a worsening job market.

Despite government support, many buyers prefer second-hand homes due to concerns that developers will still struggle to finish construction on presold projects.

That’s adding to the woes of Country Garden, which is counting on a turnaround in sales to reassure debt holders and fight off liquidation. The developer has yet to secure support from a key bondholder group over restructuring terms unveiled in early January, while it reached an understanding with a coordination committee comprising seven banks.

Country Garden said last month that it expects to reach an agreement with creditors on its debt plan by the end of February. A Hong Kong court delayed a hearing on a liquidation petition to May.

The company’s contracted sales this year could fall to levels seen in 2012 and 2013, Bloomberg Intelligence analysts Daniel Fan and Hui Yen Tay wrote in a recent note. While it made a “huge impairment provision” when posting a record loss of 178 billion yuan in 2023, further impairment is possible as it has only written down about 10.9 percent of its inventory, they said.

BLOOMBERG