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Changjiang Times: Real Estate Development Companies Had Hiring Freezes or Laid Off Employees to Deal with Mounting Debit

Since 2018, many real estate development companies have been under tremendous pressure when trying to deal with the tightening of the financing channel, as well as serious cash flow and debt issues. According to an article that Changjiang Times published, a number of large publicly traded real estate companies have either initiated hiring freezes, closed down unprofitable projects and departments, or laid off employees. The list of companies includes Greenland Holdings, CK Asset Holdings Limited, Vanke, R&F Properties, and Agile Properties. The article also quoted statistics which revealed that, in the first six months of 2018, the total debt among 136 publicly traded real estate companies reached 10 trillion yuan (US$1.46 trillion) and their average debit ratio was at 79.1 percent, which was the highest since 2005 and up 33.33 percent from 2016. In the first seven months of 2018, forty real estate companies borrowed 410.5 billion yuan (US$60.08 billion), which is equivalent to the total amount borrowed in the second half of 2017. At the same time, many real estate companies were stopped from issuing bonds in order to raise cash and fewer and fewer financing options were available for them. The article stated that, since the average financing term of a real estate debit is three years, these real estate companies will have to deal with paying off heavy debts that are due in 2018 to 2019.

Source: Changjiang Times, September 3, 2018