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Archive » October 2021 » Evergrande: the crisis of the main real estate developer in China

Evergrande: the crisis of the main real estate developer in China

Giulia Altomare, Gianluca Mattarocci
October 2021 - n. 10
Keywords: Immobiliare, crisi, indebitamento
Jel codes: G33, G32, R31

The Chinese real estate sector has shown a significant growth in recent years and some of the bigger players have already reached systemic dimensions. Evergrande represents the main actor of the Chinese real estate market and, also following the pandemic and the slowdown in China economic growth, it is dealing with liquidity management and debt sustainability problems in recent months. On September 21, the company declared to be unable to meet the payment of interest due and analysts are currently engaged in predicting the possible effects of the bankruptcy of a company of this size. The article presents a detailed analysis of Evergrande’s business model and characteristics, analyzes the market data of outstanding securities and, through a comparison with other significant bankruptcy cases of the 20th century, outlines the potential effects of the bankruptcy of the Chinese developer.

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