Evergrande creditors have more cause for concern amid reports some of its Hainan developments need to be demolished
- The buildings set to be demolished, according to the reported order, are part of the Ocean Flower Island No2 complex
- The Hainan troubles add to the already grave woes of the world’s most indebted real estate developer as it seeks a way out of debt crisis
Creditors of indebted China Evergrande Group have more cause for concern after local media reported that the giant developer has been ordered to tear down some blocks at one of its mega projects in Hainan Province.
Chinese media reported that Evergrande, once China’s largest developer by sales but which is now struggling under a mountain of debt, has been asked to tear down 39 buildings at a development on the southern tropical island within 10 days, according to a local government notice.
An order was issued by the Danzhou Municipal People’s Government on December 30, 2021 stating that an illegally obtained permit for the buildings had been revoked and the buildings now need to be dismantled, according to the reports, including one from Cailian Press, an online media title under the state-backed Securities Times.
The buildings set to be demolished, according to the order, are part of the Ocean Flower Island No2 complex, which comprises 434,941 square metres and hosts 39 residential buildings. It is one of three developments on an artificial archipelago in Danzhou, two hours’ ride by car from Hainan’s capital city Haikou.
“I don’t believe [this] … Now the so-called assets of Evergrande are required to be demolished by the government and will be worth nothing,” said Michael, a buyer of a wealth management product in default from Evergrande and who was offered property as a part repayment option. He declined to give his full Chinese name.
“Who knows whether more of its projects will be torn down and what will Evergrande use to pay us? There is just no hope.”
Evergrande did not immediately respond to a request for comment by the Post on Monday.
The Hainan troubles add to the already grave woes of the world’s most indebted real estate developer. Evergrande’s liabilities are estimated at around 1.97 trillion yuan (US$309.3 billion). Missed payments on wealth management products and bonds have already scared away many investors and put potential buyers off its various projects under construction.