Credit: Visual China
BEIJING, January 10 (TMTPOST) – Almost 90% of Chinese real estate companies witnessed a contraction in market value in 2023, with only 23 out of the 158 listed companies showing an increase, according to statistics from Leju Holdings Limited.
At the beginning of 2023, nine listed real estate companies in China had a market value of over 100 billion yuan. By the end of the year, the number of such companies had reduced to seven. Incomplete data suggests that twelve Chinese real estate companies were delisted in 2023.
Major real estate companies in China experienced remarkable changes in scale, performance, and market value in 2023, and 2024 will be crucial in determining their fate. Market value is often linked to the overall strength of a company, with higher market values associated with stronger growth capabilities.
Nearly 90% Chinese Real Estate Companies Experience Market Value Decline
By the end of 2023, the total market value of the 158 listed real estate companies in China was 1.70 trillion yuan, with an average of approximately 10.73 billion yuan. This represented a nearly 30% decrease from the average of 15.3 billion yuan in 2022.
According to Leju's statistics, in 2023, only 23 out of the 158 listed real estate companies in China experienced an increase in market value, while the rest saw varying degrees of decline. The percentage of companies facing a decline exceeded 85%, with the maximum market value reduction reaching 93%. The companies with the highest market value increase in 2023 were Zhangjiang High-Tech (70.19%), followed by Macrolink (59%), and YunNan Metropolitan Real Estate Devel Co (33.68%).
Chinese real estate market saw a downturn in 2023, leading to increased differentiation among real estate companies. For example, China Merchants Property and Swire Properties were excluded from the list of top-tier companies with a market value exceeding 100 billion yuan by the end of 2023. The seven companies that remained on the list all witnessed various degrees of market value decline.
Due to market sentiment fluctuations and the adjustments of the real estate sector, Chinese real estate companies experienced varying degrees of market value reduction. Many private real estate companies saw a significant plunge in market value, and even the leading companies in the industry experienced an overall decline in total market value.
In the A-share and Hong Kong stock markets, Vanke suffered the most significant market value evaporation among all listed real estate companies, losing 98.37 billion yuan. Even CK Asset Holdings, which had always been regarded as the weathervane of the capital market, could not resist the downward trend, and its total market value evaporated by 37.74 billion yuan.
Many Real Estate Companies Set to be Delisted in 2024
Amid financial pressures, many real estate companies are set to be delisted in 2024.
According to public data, in 2023, 46 A-share companies were delisted in 2023, with nine of them belonging to the real estate industry.
According to incomplete statistics, twelve Chinese real estate companies had delisted in 2023, including Carnival Group International Holdings Limited and Sansheng Holdings.
Ten years ago, real estate companies seized opportunities of the urbanization process, creating a boom in the industry. Many companies, such as Sunac China, quickly rose by following the development model of Country Garden. As beneficiaries of this model, these companies rapidly expanded their sales scale. However, the glory has ended, and despite attempts to sell assets and introduce strategic investments, some of them ended with delisting.
Despite a brief rise in July due to a series of adjustments in real estate policies, real estate stocks experienced a downward trend throughout 2023.
With many real estate companies exiting, the race of survival for the rest in the industry accelerates. To boost stock prices, several companies on the brink of delisting have employed various strategies. Some have protected their stock prices by increasing their shareholdings, while others have stimulated stock prices by repurchasing shares, such as ShangHai ShiMao Co., Ltd. However, these measures can only avert crises temporarily.
In 2024, the pressure on real estate companies to repay debts remains severe. Although financing policies have been continuously relaxed, the main beneficiaries are state-owned enterprises and some high-quality private real estate companies.
In 2023, with increasing differentiation in the real estate market, state-owned enterprises dominated the market, while many cash-strapped private real estate companies withdrew from the market.
Financial institutions are unwilling to become the saviors of private companies’ financial risks. Therefore, when it comes to debt repayment, private real estate companies can only rely on themselves.
(Note: 1 yuan equals $0.14.)
(This article was first published on the TMTPost App. Author | Zhao Chenhan; Editor | Liu Yangxue)