China’s measures to avoid a property bubble have been brutal for many small- and medium-sized property developers. Now they see signs of hope.
After a sweeping two-year crackdown on its debt-ridden property developers, China’s recent moves to shore up the sector are bringing some respite. But smaller builders are still struggling for survival.
Residential buildings at the Hai Yue Cheng property project, developed by Sichuan Languang Development, in Beijing.“Essentially, a lot of us are trying to win time,” Mr Yang said. His goal is simply to “hold our team together while exploring a way forward – whether that will be restructuring, strategic investment or a market turnaround.”
As lines of credit became increasingly difficult to access and home sales slumped in the shadow of COVID, many developers – industry giant China Evergrande Group included – were forced to miss repayments or to halt construction on some projects.Like many Chinese property companies, it is a family business.
Languang has slashed about 90 per cent of its workforce since early 2021 and reported an accrued loss of 11.7 billion yuan as of the third quarter last year.Years of high leverage and high growth taught entrepreneurs like Mr Yang’s father to bet big. His story – of a family rising from modest origins to substantial wealth through the property boom – is common to many of his generation. But that route to prosperity seems to be closed.
“We are still struggling to survive but there is light at the end of the tunnel,” Mr Yang said. “For the sector, I think a policy trough has come. The future will be about working with relevant authorities to seek some rescue.”Of the thousands of staff to leave Languang, many have abandoned the property industry. Some have opened restaurants or become ride-sharing drivers, while others are retraining or remain unemployed.To control costs, little things now matter.
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