Country Garden Sees Property Sales Plummet by Over a Third: Challenges in China's Real Estate Sector

Real Estate

18 hours agoPWG Publications

Country Garden's Sales Decline: A Reflection of China's Real Estate Challenges

Country Garden Holdings, once China's largest property developer by sales from 2017 to 2022, is facing significant challenges as its property sales have dropped dramatically. The latest figures indicate a substantial decline, highlighting the ongoing struggles within China's real estate sector. This downturn is part of a broader trend impacting property developers across the country, amidst government efforts to stabilize the market.

Overview of Country Garden's Current Situation

Country Garden's contracted sales for February 2025 were reported at RMB 2.30 billion, marking a 38.2% decrease from the previous year[2][3]. This decline underscores the difficulties faced by major developers in China's property market, which has been experiencing a prolonged slump since 2021. The slump is largely attributed to Beijing's "three red lines" policy aimed at reducing debt levels, along with the impact of the COVID-19 pandemic[2].

Challenges in China's Real Estate Sector

Ongoing Decline in Property Sales and Investment

China's property market continues to struggle, with sales and investment figures reflecting this trend. In February 2025, the value of homes sold declined by 2.6% to RMB 1.03 trillion, while investment in property development fell by 9.8% year-on-year to RMB 1.07 trillion[2]. This decline suggests that despite government measures to stimulate demand, such as lowering mortgage rates and reducing down payment requirements, the sector remains challenged.

Impact on Top Developers

Country Garden's experience is not unique among top Chinese developers. The total sales of China's top 100 developers slid by 5.9% year-on-year in the first two months of 2025, although this represents an improvement from a 60% decline in the same period of 2024[2]. The struggles of these developers highlight the sector's vulnerability to economic fluctuations and regulatory changes.

Government Measures to Stabilize the Market

In an effort to revitalize the property sector, the Chinese government introduced several supportive measures:

Lowering Mortgage Rates: Reducing mortgage rates to make housing more affordable.
Reducing Down Payments: Easing down payment requirements for secondary home purchases.
Controlling Land Supply: Limiting new land supply to stabilize prices.
Revitalizing Existing Sites: Encouraging the reuse of existing commercial spaces[2].

Economic Impact and Future Prospects

Economic Implications

The decline in property sales and investment has significant economic implications. It impacts not only the real estate sector but also associated industries like construction and materials, contributing to broader economic challenges.

Future Prospects for Country Garden and the Sector

Country Garden aims to improve its financial performance by prioritizing the delivery of unfinished homes and controlling expenses. The company does not expect its business to normalize until next year[2]. For the broader sector, stabilization is anticipated but at a slow pace. Analysts predict an L-shaped recovery, where prices find a trough but then stabilize at that level rather than rebounding quickly[2].

Key Trends and Challenges Ahead

Market Stabilization: The market is showing signs of stabilization, particularly in tier one and two cities.
Debt Restructuring: Country Garden is engaged in debt restructuring efforts, aiming to reduce its debt burden.
Regulatory Support: Government policies are crucial for the sector's recovery.

Conclusion

Country Garden's significant drop in property sales reflects the broader challenges facing China's real estate sector. As the sector navigates these difficulties, the interplay between market stabilization, regulatory support, and company-specific strategies like debt restructuring will be crucial. The recovery path may be slow and uneven, but with strategic planning and government backing, there is potential for stabilization and future growth.

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