China’s real estate crisis deepens as big Shanghai developer defaults

Shanghai-based Beijing-based Sunac China, one of the largest developers in the country, last month blamed the Covid outbreak for “significantly” hurting its sales in March and April and further exacerbating its liquidity crunch. At the same time, the developer admitted it had defaulted on a dollar bond.On Friday, a survey by China Index Academy — a property research firm — showed that prices for new homes in 100 cities plunged more than 40% in the first half of this year, compared with the same period last year.Authorities are trying to stem the bleeding. They have stepped up efforts to revive home sales by lowering mortgage rates and easing rules on home purchases. Some developers have come up with imaginative ways to spur sales — from accepting grain or garlic as down payment to offering pigs as an incentive to buyers. Although there are signs that sales declined less dramatically in June than previous months, the road to the property sector’s recovery will likely be “quite bumpy,” as Beijing remains committed to its zero-Covid approach, said Nomura analysts in a note on Monday.Evergrande, meanwhile, is preparing a huge debt restructuring plan led by the government. The developer plans to present its proposals before the end of this month.