New investor to resume construction at China Evergrande projects in Kunming

Kunming Green Star Construction Development has resumed construction work at Evergrande City and Evergrande Jiulongwan

No financial terms have been disclosed for the properties, which will be re-branded as Green Star projects

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The China Evergrande Group headquarters in Shenzhen. The developer says work has resumed at 10 of its projects in Yunnan province. Photo: EPA-EFE

Published: 3:05pm, 27 Dec 2022Updated: 3:07pm, 27 Dec 2022

Two stalled China Evergrande Group projects in Kunming, the capital of China’s southwestern Yunnan province, are on track for completion after a takeover by a new investor.

Kunming Green Star Construction Development, established in September as a subsidiary by Shanghai Green Star Construction Development, has resumed construction work at Evergrande City and Evergrande Jiulongwan in Kunming’s Guandu district. No financial terms have been disclosed.

Kunming Green Star said it was responding to a call by the local authorities in Kunming, which this year pledged to “guarantee home deliveries, protect people’s livelihoods and maintain social stability”.

About 40 cash-strapped developers including China Evergrande have been facing a debt crisis since Beijing announced its “three red lines” in August 2020. In November, China announced its “three arrows” of support for the sector. The industry is waiting to see if these measures, which include bank credit, bond issuances and equity financing, come to the aid of the indebted developers.

“Regulatory support over the past few months, including the expansion of support via the ‘second arrow’, has made clear that Beijing will bolster the fortunes of certain developers that it deems as winners, and smoothen the deleveraging of those destined to be losers,” said Janz Chiang, a Beijing-based property analyst at Trivium China.

“That means bond issuance support – be they guarantees or not – will be limited to healthy developers in the hopes that they will take over overdue projects from their struggling peers.”