For the second time in just over two months, Country Garden has warned investors that it could default on its $190 billion debt in a reminder that China’s real estate crisis is far from over.
The company said it had not made a repayment of 470 million Hong Kong dollars ($60 million) due to overseas bondholders by Tuesday.
The troubled developer, formerly China’s largest, is battling a liquidity crisis and has dodged multiple defaults in the past month. But persistent weakness in the property market and a difficult refinancing environment have hobbled its ability to raise enough cash to service its billions of dollars of debt.
It said sales of apartments fell by 81% in September, compared with the same month last year.
Country Garden “expects that it will not be able to meet all of its offshore payment obligations when due or within the relevant grace periods,” itsaid in a Tuesday filing to the Hong Kong Stock Exchange.
“Such non-payment may lead to relevant creditors of the Group demanding acceleration of payment of the relevant indebtedness owed to them or pursuing enforcement action,” it warned.
The deepening woes at Country Garden offer more evidence that China’s all-important property market is languishing in a persistent downturn, which poses a major threat to the country’s growth prospects. Analysts say it could take years to climb out of this crisis, as housing demand is waning because of an aging population.
The risks were underscored when a group of creditors of Evergrande, which defaulted in 2021 and is trying to fend off liquidation, said in a statement sent to CNN that the developer could suffer an “uncontrollable collapse” because of “botched” efforts to restructure its vast debts.
Such a scenario could hit households and further undermine confidence in the battered real estate market, setting back Beijing’s efforts to revive the sector.
Massive liabilities
Country Garden reported a record $7 billion loss for the first half of 2023 In late August and said it “may default” if its financial performance continues to deteriorate.
As of the end of June, Country Garden had around $15 billion worth of debt due by June 2024, according to the most recent information released by the company. Its total liabilities were around 1.36 trillion yuan ($190 billion).
If it ends up defaulting, its debts would need to be restructured and its creditors could present a winding-up petition against the company.
Country Garden said it had hired advisers to evaluate the company’s liquidity conditions and formulate a “holistic solution” intended to address its current offshore debt risk and enable it to restore business operations.
It didn’t elaborate about the possible plan, but said China International Capital Corporation Hong Kong Securities and Houlihan Lokey (China) would serve as its financial advisers. Sidley Austin would be its legal adviser.
China’s economy will be hobbled for years by the real estate crisis
Country Garden was one of the few major private developers still standing after a liquidity crisis engulfed China’s property sector two years ago. But things have taken a turn in the past few months.
In early August, the company acknowledged that it was facing its “biggest difficulty” since its establishment in 1992, citing deteriorating sales and a difficult refinancing environment. The news shocked investors, triggering a broad sell-off in China’s property stocks.
The fact that a once seemingly bulletproof firm was struggling with a cash crunch underscored how entrenched the property meltdown had become. It also highlighted the challenges Beijing faces to contain the problem.
Significant uncertainty
On Tuesday, Country Garden reported that its sales plunged further in September, down 81% from a year earlier. That followed a 72% drop in August and a 60% fall in July.
The company faces “significant uncertainty” regarding asset disposals, and its liquidity position is expected to remain “very tight,” it said.
It plans to “cooperate and engage in dialogue with all creditors to reach a feasible solution as soon as practicable,” it added.
China takes aim at real estate crisis with new measures to boost economy
If confirmed, a debt restructuring for Country Garden would be the latest for a Chinese home builder.
Evergrande, the world’s most indebted developer and once China’s second largest, was declared to be in default in late 2021. Afterward, the government intervened to prevent a disorderly collapse of the company and appointed a risk management committee to guide its restructuring.
In March 2023, the company unveiled a long-awaited plan to restructure more than $19 billion of its offshore debt and has been seeking creditor approval for it since then.
But those plans were thrown into disarray six months later when Evergrande surprised investors by announcing that its founder and chairman Xu Jiayin had been detained by the Chinese authorities on suspicion of crimes, casting serious doubt over the future of the company.
Sunac China, which was China’s third largest homebuilder in 2021, has also proposed to overhaul its liabilities after struggling to make payments.
In March, it unveiled a $9 billion restructuring plan after reaching agreements with a group of key bondholders. Last week, it won approval from a Hong Kong court for the plan, the first for a major Chinese developer that could provide a template for its industry peers.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
