China’s real estate market continues to slow down and has hit a real slump. Three major real estate giants—Evergrande Group, Country Garden, and Vanke—executed significant staff layoffs this year.
Sales Volumes Drop in 300 Cities
Overall sales volumes dipped significantly in August and over the last year. According to the latest data from the China Index Academy, 300 cities in China listed a total of 95.65 million square meters (1.03 billion square feet) of land for sale in August, a decrease of 8 percent from July and a decrease of 17 percent from the same period last year. A total of 60.61 million square meters (652 million square feet) of land was sold in August, a decrease of 32 percent from July and a decrease of 25 percent from the same period last year.
A Shanghai E-House Real Estate Research Institute report summarized the August real estate sales that occurred in 40 major cities. Total building area in all transactions in the cities reached 43.83 million square meters (472 million square feet), down 16.9 percent from July. The average price for all completed land transactions was 5,259.5 yuan per square meter, down 1.8 percent from July.
In first tier cities, total land area sold in August dropped 4 percent from July, in second-tier cities it dropped 17.1 percent, and in third-tier cities the decline logged in at 5.7 percent.
Total land sales volume in those 40 cities was 1.93 billion yuan ($270 billion), a decrease of 30.3 percent from July, and a decrease of 11.2 percent from August last year.
Three Leading Real Estate Companies Cut Jobs
Evergrande Group released its earnings report for the first half of 2019 in the last week of August. The nearly 49 percent decline in net profit was the most significant in the past ten years. The report attributed the drop to a dramatic decrease in building sales.
The company had to cut 3,000 jobs this year.
Country Garden, a Guangdong-based real estate development company, laid off approximately 15,000 employees in the first half of this year, a whopping 11 percent of its workforce.
Vanke cut 589 jobs that cost 14 million yuan ($1.96 million) in severance pay.
These are the three giant companies in China’s real estate development arena. The situation for smaller real estate companies could also become significant.
According to public information from China’s courts, six real estate companies in Hebei Province declared bankruptcy in one day, Aug. 17.