Key Takeaways:
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• China Vanke projects $6.3 billion loss for 2024, marking crisis spread to stronger developers
• State-owned developers’ market share surged to 70% in 2024 from 32% in 2019
• Current housing inventory would take 24 months to clear nationwide, 28 months in smaller cities
• State entities now control 85% of land purchases, up from 61% in 2021
What Happened?
China Vanke, one of the country’s largest remaining private developers, has fallen into crisis, projecting a 45 billion yuan loss for 2024. The Shenzhen government has intervened through state-owned Shenzhen Metro, which now controls nearly half of Vanke’s senior management. This follows the pattern of other major private developers like Evergrande, Country Garden, and Sunac, which have already collapsed.
Why It Matters?
This transformation represents a fundamental shift in China’s property sector from private to state control. The crisis has created a self-reinforcing cycle where falling sales lead to lower cash flows and higher debts, causing buyer hesitation and further sales decline. The situation is particularly significant as real estate has been a crucial driver of China’s economic growth. The shift to state dominance marks a reversal of decades of market-oriented development.
What’s Next?
The immediate focus is on whether Beijing will expand its support for the sector beyond ensuring completion of presold homes. Market fundamentals remain challenging, with extensive inventory overhang particularly in smaller cities. Watch for further consolidation under state control, potential policy interventions, and the fate of remaining private developers. The trend suggests China’s property sector will likely become increasingly state-dominated, with implications for economic growth and market dynamics. Investors should monitor government policy shifts and the performance of state-owned developers as indicators of sector stability.
