Before the year 2020, the real estate market in China was characterized by a vigorous surge, with numerous real estate companies flaunting substantial financial strength, swiftly acquiring a multitude of property projectsIt was an era marked by aggressive expansion, where the mantra seemed to be growth at any costHowever, a stark transformation has ensued, fundamentally altering the industry landscapeToday, the path for real estate firms is fraught with distress—be it operationally or financiallyThe common strategy adopted by most companies now is to tighten their belts and navigate the harsh waters of economic difficulty.

In the face of ongoing market struggles, numerous real estate companies have begun escalating their asset liquidation effortsThis sharp pivot comes amid a backdrop of falling sales and challenges in recouping fundsIn a recent move, Sunac China, a prominent player listed on the Hong Kong Stock Exchange, sold a spectacular "ice and snow big cake" project for 1.021 billion yuan, a significant gesture underscoring the increasingly precarious state of the sector.

Simultaneously, Yuexiu Property revealed on December 4 that it had finalized an agreement to divest itself of all shares in Guangzhou Hongcheng Development Limited for 1.092 billion yuan

This entity owns key office spaces and parking facilities within the Guangzhou International Trade Center, highlighting a strategic shift in Yuexiu's approach towards managing its real estate portfolio.

Moreover, Greentown China announced on December 3 its intention to sell all shares in Hangzhou Chengling Lulong Enterprise Management for 482.3 million yuan, which includes vast real estate holdings and several ancillary facilities in Hangzhou's Gongshu DistrictOn the same day, Junhao Group decided to offload multiple units ranging from the first to the eighth floors at the Xuzhou Guojin Times building, planning to realize 25.68 million yuan from this transaction.

The common goal behind these asset disposals is clear: to recover funds and restructure financial standingsYuexiu stated that its asset sale targets optimizing cash flow, while Greentown aims for a balanced and strategic adjustment of its asset mix to bolster financial stability

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Similarly, Junhao's intentions with the funds are focused on repaying debt and reinforcing operational capital, indicating a concerted effort among these companies to mitigate their financial burdens.

The trend of asset sales hasn't been isolated to these few companiesSince November, there has been a noticeable uptick in reports from real estate firms disclosing their plans to either sell or having already sold property assetsOther notable participants in this wave include Shimao Group, New World Development, and Country Garden, to name a few of the well-known companies liquidating their holdings this year.

Interestingly, many properties that were once highly coveted in the robust market have turned into burdensThe decline in investment demand amid market adjustments has led to sharply increased difficulties in asset liquidationConsequently, firms find themselves compelled to part with valuable assets at discounted prices just to recoup cash flow.

Recently, a troubling rumor surfaced regarding a former billion-yuan sales company, Xian Sheng Holdings, suggesting that its executive director had fled abroad

While the company hastily denied these claims, it is notable that the firm had already experienced debt defaults in March 2022 and faced delisting from the Hong Kong Stock Exchange by November this year, as it could not publish its annual results as required.

The burden of debt remains a formidable challenge within the real estate sectorShifts in supply and demand dynamics have significantly impacted the market outlook for 2024, introducing serious challenges for the entire industryThe repeated asset sales by numerous companies paint a picture of a tight cash flow situation, particularly for private enterprises that continue to face severe financing hurdlesA report from CRIC Research Center indicates that the total financing for 65 key real estate firms plunged to 350.7 billion yuan in the first three quarters of 2024, which is a staggering 29% decrease year-on-year.

With financing access restricted in conjunction with disappointing sales, the collective sales performance within the industry is quite concerning

Data from China Index Academy shows that the total sales volume for top 100 property firms in the first eleven months of 2024 amounted to 3.8516 trillion yuan, reflecting a sharp decline of 32.9% compared to the previous year.

Furthermore, the short-term debt repayment abilities of these firms are on a continuous downward trend, with many experiencing rising asset-liability ratiosMidway through 2024, the number of listed firms at risk regarding their short debt-to-cash ratios has almost doubled compared to 2021.

By 2025, it is projected that the outstanding bond maturity for real estate firms will surpass 700 billion yuan, although overall debt levels are somewhat less daunting than peak periodsSince the beginning of 2020, 76 companies have reported debt defaults, unduly peaking around 2022. Though occasional defaults still occur in 2024, the rapid escalation seems to have finally subsided.

Following the introduction of several stimulating policies domestically in late September, there have been signs of restored confidence in the real estate market, especially in first-tier cities, where demand remains robust and prices are hinting at stabilization