Country Garden Holdings expects to report a $7.6 billion loss for the first half of the year in the heaviest blow since the company’s public debut sixteen years ago. The announcement marks another significant challenge for Country Garden, which missed an important interest payment on dollar bonds this week.

Country Garden’s Sales Fell 60% in July Year-Over-Year

China’s largest property developer Country Garden is expected to post a loss of $7.6 billion for the first half of 2023, the Wall Street Journal reported on Friday. If true, it would mark the worst-ever loss for the company since going public in 2007.

The reports come amid mounting problems for Country Garden, which is attempting to avoid joining a string of collapsed property developers in China. Country Garden is the largest surviving real estate developer in the Asian country.

Furthermore, the company reported its sales plummeted 60% in July compared to a year ago, representing a significantly sharper decline than in earlier months. The developer also said its profit margins have contracted, property projects sustained value loss, apartment sales plunged for a fourth month, and refinancing has become increasingly challenging.

The Foshan, China-based firm missed $22.5 million in interest payments on US dollar bonds earlier this week, tumbling its shares. The company’s stock was trading at 0.98 HKD ($0.13) at the time of writing, down 29% over the past 5 days. Country Garden has a 30-day grace period to make the payments.

Why is China’s Housing Market Struggling?

If Country Garden defaults, it will represent the highest-profile collapse of a second major slump in China’s embattled housing market.

Home sales in China showed signs of recovery earlier this year when the government lifted a ban on equity refinancing and instructed banks to provide specific developers, including Country Garden, with a financial boost. However, the market’s rebound was short-lived, with sales returning to a downward trajectory in Q2 when China’s broader economic growth also lost momentum.

China’s property sector fell into a credit crisis after authorities cracked down on its debt levels in August 2020. Years of robust market growth produced several “ghost towns” where supply notably exceeded demand as developers rushed to capitalize on the rising interest. Nevertheless, property investment in China slipped by almost 8% in the first half of the year.

This article originally appeared on The Tokenist

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