China’s post-pandemic real estate sector remains troubled, and the latest news indicates the worst might be yet to come. According to reports Country Garden, China’s largest property developer, suddenly withdrew a planned $300 million share placement Monday evening. The move sparked an 11 percent drop in the company’s share value overnight and deepened the Chinese investment community’s worries about the feasibility of the real estate market’s recovery anytime soon. Country Garden responded to media reports about the share placement, stating that “as of the date of this announcement, no definitive agreement has been entered into with respect to the proposed transaction, and the company is not considering the proposed transaction at this stage.” Investors and policymakers alike are concerned that Country Garden could go the way of other large Chinese developers over the last couple of years and find itself in default. The news hit the headlines just as reports emerged that new home sales among China’s 100 largest developers had dropped 33 percent year-over-year in July.
China’s real estate woes don’t precisely mirror those in the U.S., but some of the steps the country has taken to avert massive loan defaults among real estate developers are happening right here at home. Last month, the People’s Bank of China revealed it would extend loan maturity dates for developers by 12 months. In the U.S., many banks are now working with borrowers to extend payment dates and renegotiate loan terms in an effort to avoid defaults. And China and the U.S. appear to be on a similar page in terms of trying to bolster the real estate industry by adjusting to new demands. In the executive meeting of the State Council on July 31 in Beijing, attendees concluded that it is essential to create policies that are “conducive to the stable and healthy development of the real estate market according to different needs and cities.” In the U.S., governments on the city, state, and Federal level have tried to create policies that would help development meet the new needs of cities as well, like changing zoning laws and incentivizing office to residential conversions.