Chinese housing developer Vanke reported significant first-half losses on Friday, highlighting the ongoing crisis in the real estate sector as home sales decline in a sluggish economy. Vanke, China’s second-largest developer by sales last year according to CRIC, posted a net loss of 9.9 billion yuan ($1.4 billion) for the first half of the year, exceeding the company’s earlier estimate of 7 to 9 billion yuan.
Despite earning a net profit of 9.9 billion yuan during the same period in 2023, Vanke now faces severe financial challenges. The company, partly owned by Shenzhen’s city government, acknowledged that rebuilding consumer confidence in the housing market will take time.
The Chinese real estate market, once a key driver of the country’s economic growth, is currently under unprecedented strain. With developers like Evergrande and Country Garden already facing financial difficulties, Vanke has become the latest casualty in the sector. In response to the ongoing crisis, Moody’s downgraded Vanke’s credit rating to B1, marking it as “highly speculative.”
Despite government efforts to stimulate the market, including various incentive measures, the sector remains weak. Real estate prices in major Chinese cities continued to fall in July, indicating that demand remains low.
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