Country Garden Projects $26 Billion Loss, Aims for 2025 Debt Restructuring Amid China’s Property Crisis

Country Garden Holdings (2007.HK), one of China’s largest property developers, sent shockwaves through financial markets with a late-night announcement projecting a staggering loss between RMB 185 billion and RMB 215 billion ($26 billion) for the first half of 2025. This grim forecast underscores the deepening financial distress within China’s real estate sector and highlights the company’s critical efforts to complete a major offshore debt restructuring by the end of 2025. The scale of the projected loss—an increase from the RMB 151 billion loss recorded in the same period last year—reflects persistent challenges including shrinking sales, compressed margins, and significant asset write-downs. As the property crisis continues to unfold, all eyes are on Country Garden’s ability to stabilize its operations and meet its debt obligations. This article delves into the factors behind the loss, the progress of the company’s debt restructuring, and what it means for the future of China’s real estate industry. Understanding Country Garden’s Massive Losses Country Garden’s projected loss of up to RMB 215 billion for the first half of 2025 is not an isolated incident. It follows two years of substantial financial hemorrhage, with the developer reporting a net loss of RMB 178.4 billion in 2023 and RMB 32.8 billion in 2024. Cumulatively, the company has lost over RMB 211 billion in just two and a half years. These numbers highlight the severe operational and market headwinds facing even the largest players in China’s property sector. Key Drivers Behind the Losses According to the company’s filing, the losses stem primarily from two factors: a sharp decline in property development revenue and increased asset impairment charges. With housing sales continuing to slump amid weak buyer confidence and economic uncertainty, developers like Country Garden are struggling to monetize existing projects. Additionally, falling property prices have forced the company to write down the value of its assets, further eroding its balance sheet. Industry experts, including Liu Shui (刘水), Director of Corporate Research at China Index Academy, note that these issues are widespread across the sector. Industry-Wide Pressures Country Garden is far from alone in its struggles. Data from China Index Academy shows that, as of August 20, 2025, 71 listed property firms in China had issued profit warnings for the first half of the year. Of these, 45 companies—accounting for 63.4% of the total—expected to report losses. Several developers are projecting losses exceeding RMB 10 billion, signaling a sector-wide downturn driven by falling demand, high debt levels, and regulatory constraints. The Debt Restructuring Timeline and Progress Against the backdrop of mounting losses, Country Garden is racing against time to restructure its offshore debt, which totals approximately $14.07 billion. In a positive development, the company announced on August 19 that it had reached an agreement on key terms with a coordination committee representing creditors holding 49% of its existing syndicated loans. Additionally, over 77% of holders of Class 2 debts have signed restructuring support agreements. Steps Toward a Sustainable Capital Structure Country Garden has emphasized its commitment to proactive debt management. The company is seeking to extend debt maturities and reduce financing costs to build a healthier, more sustainable capital structure. Its goal is to formally complete the debt restructuring process by the end of 2025. If successful, this would mark one of the largest and most complex debt restructurings in the history of China’s property industry. Broader Implications for the Market The outcome of Country Garden’s debt restructuring efforts is being closely watched by investors, competitors, and policymakers. According to China Index Academy, 20 distressed developers have already received approval for debt restructuring or reorganization plans, with total debt involved exceeding RMB 1.2 trillion. A successful restructuring by a giant like Country Garden could set a precedent and offer a roadmap for other struggling firms. Operational Challenges and the ‘Ensure Delivery’ Initiative Despite its financial woes, Country Garden remains focused on maintaining operational stability and fulfilling its commitments to homeowners. The company has adopted what it calls a ‘limit expenditure strategy’ to optimize resource use and strengthen its project management systems. In the first half of 2025, Country Garden and its joint ventures delivered approximately 74,000 homes to buyers. Leadership’s Stance on Priorities Yang Huiyan (杨惠妍), Chairperson of Country Garden, has repeatedly stressed that ensuring timely delivery of pre-sold homes is the company’s top short-term operational goal. In a July monthly management meeting, she urged teams to evaluate resource allocation carefully and accelerate progress wherever possible. This customer-first approach is critical not only for maintaining social stability but also for preserving the company’s reputation in a highly competitive market. Sales Performance in a Down Market The company’s contracted sales have continued to decline, reflecting broader market weakness. From January to June 2025, Country Garden reported equity sales of RMB 16.75 billion, a decrease of 35.45% compared to the same period in 2024. This trend is consistent with industry data pointing to a prolonged downturn in China’s property sales, with many developers struggling to attract buyers despite price cuts and incentives. What’s Next for Country Garden and the Property Sector? The coming months will be decisive for Country Garden as it works to finalize its debt restructuring and navigate ongoing market challenges. The company’s ability to restore investor confidence, stabilize cash flow, and adapt to the ‘new normal’ in China’s property market will determine its long-term viability. Opportunities Amid the Crisis While the situation remains difficult, there are signs that policymakers are increasingly focused on supporting the property sector to prevent systemic risk. Measures may include easing purchase restrictions, lowering mortgage rates, and providing financial support to ensure completion of pre-sold homes. Companies that successfully restructure debt and streamline operations could emerge leaner and more resilient. Lessons for Investors and Stakeholders Country Garden’s experience offers important lessons for investors, homebuyers, and industry participants. It underscores the importance of sustainable growth, prudent financial management, and agility in responding to market shifts. As the property sector continues to evolve, stakeholders should monitor regulatory developments, corporate financial health, and macroeconomic indicators. Country Garden’s story is a stark reminder of the volatility and complexity of China’s property market. With massive losses, a pressing need for debt restructuring, and ongoing operational pressures, the company faces a critical juncture. However, its progress in engaging creditors and delivering homes offers a glimmer of hope. For those closely watching China’s economy, the company’s journey provides valuable insights into the future of real estate development and corporate restructuring in the world’s second-largest economy. Stay informed with regular updates on debt restructuring developments and market trends. 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