Shimao, Kaisa, Fantasia Suffer Deepening Losses: A Forewarning of Prolonged Real Estate Market Recovery in China

Shimao, Kaisa, and Fantasia's increased losses indicate that the market revival is still several months off. Shimao, which is headquartered in Shanghai, reported a deficit of 22.7 billion yuan (US$3.2 billion) in the first half up to June, up from 12 billion yuan from the same period the previous year.

Shimao's financial deficit escalated to 22.7 billion yuan (US$3.2 billion) in the first half of the year to June 30, a significant increase from 12 billion yuan the previous year, according to the company's recent stock exchange report on Thursday. Similarly, Kaisa's net loss grew by 36 per cent, reaching 9 billion yuan. Meanwhile, Fantasia also experienced a financial setback, with a loss of 3.2 billion yuan compared to the 2.7 billion yuan loss from a year earlier.

Income for all four private developers decreased compared to the previous year as customers delayed buying due to ongoing worries about home deliveries. Due to the disappointing financial results, the developers will not distribute mid-year dividends.

Shimao stated in its documentation that the Chinese real estate sector persisted in its modifications throughout the initial six months of 2024, showing no indications of recovery from the sluggish commercial property sales.

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Upsurge, downfall, and debt: Is China's real estate market in a slump?

The real estate sector in China, which used to be a significant contributor to the country's economy, has experienced a downturn since the government imposed the "three red lines" policy in August 2020 to curb excessive borrowing by developers. This policy left developers in desperate need of cash without financial aid, leading to an unprecedented level of bond defaults.