Country Garden Faces Deepening Sales Decline Amid Debt Issues

Country Garden Holdings Co., a major Chinese real estate developer, is grappling with intensifying liquidity concerns as its sales in November continued to decline, signaling further troubles in China's real estate sector. The company reported contracted sales of 3.01 billion yuan ($414 million) for November, a 52.3% decrease compared to the same month last year. This marks a significant setback from the 31% sales decline observed in October, according to calculations derived from corporate filings.

Despite recent efforts by the Chinese government to stimulate the housing market—such as reducing borrowing costs on existing mortgages, easing purchasing restrictions in major cities, and lowering taxes on property transactions—the real estate market has been unable to sustain a short-term recovery. Broader economic challenges, including deflationary pressures, have continued to contribute to the drop in property sales.

Country Garden's sales have decreased more sharply than its competitors; this trend is partly attributed to the company's previous strategy of focusing on lower-tier cities and migrant workers. In contrast to Country Garden's sales decline, China's top 100 real estate firms, tracked by China Real Estate Information Corp., experienced a relatively modest average drop of 6.9% in housing sales.

The financial difficulties for the Foshan-based developer are mounting. In February, a creditor filed a lawsuit against Country Garden after the company failed to meet its dollar-denominated debt obligations from a year earlier. Currently, Country Garden is engaged in negotiations with creditors to restructure its debt. However, a recent report indicated that the company missed its self-imposed deadline to secure critical creditor support for the restructuring plan.