Shimao, a large real estate developer in Shanghai, defaults on debt

Founded by businessman Hui Wing Mau in 2001, Shimao develops large-scale residential and hotel projects across the country. Shanghai owns Shimao International Plaza, one of the tallest skyscrapers located in the heart of Shanghai.

In March, the company estimated that its net profit for 2021 was down about 62% from the previous year, mainly due to the “harsh” environment faced by the real estate sector. It then postponed the release of its results for 2021, citing the shutdowns in Shanghai.

“Due to significant changes in the overall environment of the real estate sector in China since the second half of 2021 and the impact of Covid-19, the group has seen a significant decline in its contractual sales in recent months, which is expected to continue in the near term until it stabilizes,” said Shimao. real estate sector in China.

The company added that it was trying to reach “friendly resolutions” with creditors about its failure to make capital payments abroad. religion. In the absence of an agreement, creditors can compel the company to speed up repayment.

The industry’s problems have been exacerbated by Beijing’s non-proliferation policy and the slowing economy. China placed several of its major cities – including Shanghai – under strict lockdown earlier this year to combat rising Covid cases, hitting business hard.

On Friday, a survey by the China Index Academy – a real estate research firm – showed that prices for new homes in 100 cities fell more than 40% in the first half of this year, compared to the same period last year.

While there were signs that sales fell less sharply in June than in previous months, the road to a property sector recovery is likely to be “extremely bumpy,” as Beijing remains committed to a zero-Covid approach, Nomura analysts said in a note on Monday.