Propmodo Daily

By Franco Faraudo · Feb. 29, 2024

Greetings!

China's largest property developer is on the ropes. After a petition to liquidate the company's assets, the developer's fate now rests on whether the obscure Hong Kong lender, Ever Credit, possesses enough political sway to force the Chinese government to act.

This week, Propmodo Technology is taking a deep dive into Building Operations & Controls! We explore HVAC automation, the strategies property managers are using to maximize results with less resources, and the potential future of robots in the office. Be sure to check out "The State of Commercial Real Estate Property Management for 2024," a new report from our sponsor Building Engines.

Now, let's dig in!

The Creditor Trying To Push China’s Largest Developer into Bankruptcy

China's largest residential developer, Country Garden, faces potential liquidation after a petition was filed against it for failing to repay a $204 million loan. This development could have significant repercussions for the Chinese real estate market and the broader economy, as many citizens hold a significant portion of their wealth in their homes. Country Garden, which took the top spot after Evergrande's collapse in 2021, has a much larger footprint with 3,121 projects compared to Evergrande's 800. This raises concerns about potentially wider social unrest similar to the mortgage protests witnessed last year.

Over 50 Chinese property companies have already defaulted, and many of them have refused to repay foreign creditors. Since the company that filed the petition, Ever Credit, is based in Hong Kong, some have said that it might have a hard time forcing a company as important as Country Garden to pay.

But a close look at this somewhat obscure company reveals that might not be the case. Ever Credit is a subsidiary of Kingboard Holdings, the largest laminate panel and circuit board manufacturer in China. Kingboard has made a noteworthy property investment outside of China; it bought the former KPMG headquarters in London from Brookfield in 2022.

The founder of Kingboard also seems to be a rather connected individual. Paul Cheung grew up in Shenzhen and worked on a farm with his father at a young age and eventually got hired as a warehouse clerk for 3M in America (or at least that is what the obscure articles that exist about him all say). Cheung gave up the American dream to come back to China to start a salt trading business, which, of course, led him to open up a factory that produced “copper-clad panels.”

Now, Mr. Chueng has built factories in many provinces in China and has gotten himself into the good graces of provincial governmental officials. While there is no mention of any official status in the Communist Party, his connections, philanthropy, and the important products that his factory produces certainly make it seem like he has more political capital than most foreign creditors.

At this point, it looks like Country Garden needs the government to step in and help them stay solvent. There are plenty of reasons for the government to do so; they have already introduced new rules that extend new forms of credit to developers. But they have also said they expect local governments to step in to solve their real estate problems. If their creditors are able to make the case that they need to be dissolved to pay their debts, China’s ruling party could let Country Garden go under, especially if there is a way for them to prevent the backlash that may come with it.

Insider Insights

Overheard

Popular Articles

More News

Propmodo Technology: Building Operations & Controls

Are You Enjoying This Newsletter?

Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

📧 Forward it to a friend and suggest they check it out.

🔗 Share a link to this post on social media.

🗣 Have ideas for future topics (or just want to say hello)? Share your feedback and tips at [email protected] or connect with us on X through @propmodo.

✅ Not subscribed yet? Sign up for this newsletter here.

📫️ Please add our newsletter email, [email protected], to your contacts to make sure you don’t miss any updates.

Explore Propmodo

• Read exclusive articles about a variety of topics, including Real Estate, Workplace, Buildings, and Development.

• Browse our collection of interactive Propmodo Research e-books.

• Sign up for upcoming Propmodo Live Webinars or watch past Propmodo Live videos on-demand.

• Dive into Propmodo Technology articles, podcasts, and short videos about the future of commercial real estate.

Enjoy reading about trends and innovation in commercial real estate? Subscribe to Propmodo.com for unrestricted access to reliable, data-driven journalism and exclusive insights available only to subscribers.

Interested in sponsoring this newsletter? Contact us here