World News | Chinese Property Giant Evergrande Ordered to Demolish 39 Buildings

Hong Kong, January 5 (ANI): Evergrande, which was China's second-largest property developer by sales in 2020, is reeling under more than USD 300 billion of total liabilities and has been ordered to demolish 39 buildings.

Chinese media reported over the weekend that authorities in Hainan province ordered Evergrande to demolish buildings saying that the building permits had been illegally obtained, reported CNN.

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The company acknowledged the order in a post on WeChat on Monday night but added that it did not affect other buildings in the same property project, which involve some 61,000 property owners.

The 39 buildings are part of Evergrande's gigantic Ocean Flower Island project in Hainan, in which the company has invested nearly USD 13 billion over the last six years, reported CNN.

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Troubled Chinese real estate developer Evergrande is trying to reassure investors about the impact of an official order to demolish a few dozen buildings in China.

Meanwhile, the company suspended trading its shares in Hong Kong on Monday.

In a filing with the Hong Kong Stock Exchange on Tuesday, the company said it would resume trading, and confirmed that it would "actively communicate" with authorities about the Ocean Flower Island project and "resolve the issue properly," reported CNN.

In Tuesday's filing, Evergrande also said it has achieved contracted sales of 443.02 billion yuan (USD 70 billion) for 2021. That was down 39 per cent from 2020's sales figure. And regarding liquidity, the company said it would continue to "actively maintain communication with creditors, strive to resolve risks and safeguard the legitimate rights and interests of all parties," reported CNN.

Evergrande is reeling under more than USD 300 billion of total liabilities. It has been scrambling for months to raise cash to repay lenders, and the company's chairman Xu Jiayin has been reportedly selling off personal assets to prop up its finances. But that doesn't seem enough to avoid default, reported CNN.

In December, Fitch Ratings declared that the company had defaulted on its debt, a downgrade the credit ratings agency said reflected Evergrande's inability to pay interest due that month on two dollar-denominated bonds.

Analysts have been long concerned that a collapse by Evergrande could trigger wider risks for China's property market, hurting homeowners and the broader financial system.

Real estate and related industries account for as much as 30 per cent of the country's GDP. The US Federal Reserve warned in November that trouble in Chinese real estate could damage the global economy, reported CNN.

There's already plenty of evidence that Beijing is taking a leading role in guiding Evergrande through a restructuring of its debt and sprawling business operations.

But analysts warned, though, that the real estate crisis remains a looming threat for China. (ANI)

(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)