Hong Kong-listed property giant Vanke reported a significant annual loss of 49.5 billion yuan ($6.8 billion) on Monday, attributing the sharp decline to falling sales and shrinking profit margins despite efforts by Beijing to revive the struggling housing market.
The company stated that 2024 had been an “exceptionally challenging year,” apologizing for the “distress caused” by the significant loss and ongoing pressure on liquidity, news agency AFP reported.
Expansion inertia
Vanke acknowledged that it had “failed to break free from expansion inertia of high-debt, high-turnover and high-leverage in a timely manner,” which led to aggressive investment and over-expansion. This overextension contributed to the company’s substantial losses, marking Vanke’s first annual loss since it was listed in 1991. The firm’s loss exceeded its initial January estimate of $6.2 billion. Revenue also dropped by 26% year-on-year to $47.3 million.
As part of the company’s ongoing reshuffling, Vanke’s Chief Operating Officer and Executive Vice President, Liu Xiao, resigned on Monday due to “work adjustments.” The company confirmed that Liu will continue to work with the company, focusing on strategic investment business.
The shakeup comes after the resignation of Vanke’s CEO, Zhu Jiusheng, in January due to health reasons. Reports from Chinese outlets suggested Zhu had been “taken away by public security authorities,” though the nature of the alleged offenses was unclear.
Despite Beijing’s efforts to stabilize the property sector, including a policy package announced in November to lower deed tax rates in major cities like Beijing and Shanghai, Vanke faced a net loss of $4.35 billion in the final quarter of 2024. The company warned of intensified liquidity pressure due to concentrated repayment obligations on its public debts this year. Chinese authorities are reportedly considering plans to help Vanke plug a $6.8 billion funding gap this year.
Other major Chinese developers report losses
Vanke is not the only property developer facing financial troubles. Kaisa, another troubled developer, reported a 48.4% increase in losses to $4.03 billion for 2024. Country Garden also reported a $4.5 billion annual loss, with total debt reaching $34.9 billion at the end of 2024.
Vanke’s struggles are part of a broader crisis in China’s real estate sector, which has been dealing with a massive debt burden and severe financial distress for many developers.
