The crisis engulfing China’s real estate sector has seen Asia’s richest woman lose $12b of her $24b fortune in one year.
The Bloomberg Billionaires Index released on Thursday indicated that China’s real estate sector crisis continues to worsen and Yang Huiyan’s fortune has taken a huge dent as a result.
Huiyan, a majority shareholder in China’s biggest property developer Country Garden, saw her net worth plunge by more than 52% to $11.3bn from $23.7bn a year ago, the index showed.
In an apparent sign that the crisis is spreading to developers who are previously thought to be rock solid, Yang’s fortune took a major hit on Wednesday when the Guangdong-based Country Garden’s Hong Kong-listed shares fell 15% after the company announced it would sell new shares to raise cash.
Investment in China’s real estate sector fell by 5.4 per cent year-on-year in the first half of 2022, down to around 1,009.58 trillion US dollars, with residential investment down by 4.5 per cent, according to data released by the National Bureau of Statistics (NBS) on 15 July 2022.
State media reported that Yang inherited her wealth when her father – Country Garden founder Yang Guoqiang – transferred his shares to her in 2005.
She consequently became Asia’s richest woman two years later after the developer’s initial public offering in Hong Kong.
But she is now barely holding on to that title, with chemical fibres tycoon Fan Hongwei a close runner-up with a net worth of $11.2bn on Thursday.
Chinese authorities cracked down on excessive debt in the property sector in 2020, leaving major players such as Evergrande and Sunac struggling to make payments and forcing them to renegotiate with creditors as they teetered on the edge of bankruptcy.
Buyers across the country, furious at lagging construction and delayed deliveries of their properties, have begun withholding mortgage payments for homes sold before completion.
While Country Garden has remained relatively unscathed by industry turmoil, it spooked investors with an announcement on Wednesday that it planned to raise more than $343m through a share sale, partly to pay debts.
Proceeds from the sale would be used for “refinancing existing offshore indebtedness, general working capital and future development purposes”, Country Garden said in a filing to the Hong Kong stock exchange.
China’s banking regulator has urged lenders to support the property sector and meet the “reasonable financing needs” of firms as analysts and policymakers fear financial contagion.
The property sector is estimated to account for 18-30% of the country’s GDP and is a key driver of growth in the world’s second-largest economy.
Analysts have warned that the industry is mired in a “vicious cycle” that would further dampen consumer confidence, following the release of dismal Q2 growth figures that were the worst since the start of the Covid-19 pandemic.
