The Fall of a Dragon: Liquidation of China’s Evergrande

This week the world witnessed the fall of China’s real estate giant Evergrande. A saga that has been unfolding over recent months, and finally came to a head when a Hong Kong court ordered its liquidation this Monday (29th).

• In the heat of the drama, GRI Club promptly held the Online Meeting ’The Evergrande Liquidation: Consequences, Risks, Fears, and Lessons from the Fall of a Dragon’, with expert commentary from author and journalist, Ian Willams.

The question that lingers: Will China respect the ruling by the Hong Kong court? Evergrande is a “microcosm” of China’s economy, says Williams, and it would not be surprising if the CCP simply ignored the ruling, burying the problem until it becomes even larger.

Hui Ka Yan, chairman of the board and Communist Party secretary of the Evergrande Group, is certainly playing the scapegoat, allowing the CCP to present the problem as mismanagement and corruption to avoid addressing underlying economic issues.

• The truth is: the economic impacts are enormous. The real estate market accounts for more than 25% of China’s economy and one source claims that as many as half of Chinese developers are financially insolvent.

GRI Club will always be on call to respond to breaking news impacting the real estate market with impromptu online meetings, gathering our club members and relevant experts to take stock of the situation and its impacts ahead of the game.

Register to join GRI Club HERE.

Latest GRI Report: Chairmen’s Retreat 2024

There are few things which impact real estate lenders and investors as much as interest rates, nevertheless polls during the recent GRI Global Chairmen’s Retreat 2024 revealed that the issue keeping real estate players up at night is the growing mutual hostility between big nations.

• The annual retreat welcomed the world’s most significant decision-makers in real estate to participate in four days of closed-door discussions regarding the wider context of real estate. The latest GRI report presents all polling results and in depth takeaways from the event.?

Only 34% of participants claimed optimism for the next 12 months of the real estate industry, while 37% were neutral, and 24% pessimistic.

• It was suggested that the lack of optimism is due to the matters of concern having such consequential impacts, as well as being entirely out of the control of real estate players - referring to geopolitical tension, interest rates and inflation, and a potential win for Trump in the 2024 US elections.

Despite this, there was a definite glass-half-full sentiment at the event overall. It was reassured that interest rates will not rise further, inflation seems under control, and real estate still holds considerably more potential as an inflation hedge in comparison to other asset investments.

Read the full report HERE.

Can France revive itself in 2024?

Deputy Chief Economist at BNP Paribas, Hélène Baudchon, addressed GRI Club members last week at the French Market Kickoff 2024 Club Meeting in Paris. France, similar to the rest of the eurozone, is on the verge of a recession, with barely-positive growth forecast for Q1 2024.

• Hopes are raised for spring, by which time a modest recovery is expected to begin, prompted more by household consumption than by companies.

An important factor supporting growth is the subtle disinflation occurring, which is expected to continue before finally falling below the 2% target by summer.

The latest GRI article presents the main points from the discussion, including data and forecasts from BNP Paribas Real Estate on the French economy and commercial real estate market, as presented by Olivier Ambrosiali, Deputy General Director of BNP Paribas Real Estate.

Read the full article HERE.

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