Evergrande’s 2021 Sales Plunge 39% as Home Sales Almost Frozen

(Bloomberg) -- China Evergrande Group's property sales plummeted in 2021 for the first time in at least a decade, as the giant developer slipped into default and buyer confidence faded.

Contracted sales last year plunged 39% to 443 billion yuan ($70 billion) from the previous year, according to Bloomberg calculations based on preliminary company data. It met about 60% of a 750 billion yuan target set at the start of the year.

The preliminary results suggest sales at the world's most indebted developer have been almost frozen since October, when its liquidity woes intensified. Annual sales was almost the same then, with 442 billion yuan sold year to date as of Oct. 20.

Evergrande's property sales had been on a steady decline since the middle of the year after news of stalled construction startled homebuyers and spurred protests. The company is rushing to deliver on its building obligations, saying last week that it resumed construction on 92% of its housing projects compared with just about 50% at the beginning of September.

Shares of the developer, which resumed trading after a one-day halt, rose as much as 8.2% as of 1:10 p.m. in Hong Kong. Monday's suspension followed reports Evergrande has been ordered to demolish apartment blocks in a development in Hainan province and had dragged down shares of other Chinese builders.

Evergrande said it had received an administrative penalty notice issued by the Danzhou Comprehensive Administrative Law Enforcement Bureau regarding 39 buildings on Ocean Flower Island, according to a Hong Kong stock exchange filing. It said it would actively communicate with the authority to resolve the issue properly.

The order adds to troubles facing the property giant, which has been straining under more than $300 billion of liabilities, a cash crunch in recent months and the decline in new-home sales. S&P Global Ratings and Fitch Ratings labeled Evergrande a defaulter in December following coupon-payment failures on dollar notes. The company will continue to “actively maintain communication” with its creditors, it said in the filing.

Evergrande has struggled to make progress on asset sales to raise cash, even after founder Hui Ka Yan put stakes in once-prized assets such as his electric-vehicle and bottled-water businesses on sale. The developer in October scrapped talks to sell a controlling stake in its property-management business, which could have generated about $2.6 billion. Plans to offload its Hong Kong headquarters have also stalled.

With assistance from Bloomberg