A major Chinese property developer, Skyfame Realty, is under pressure for its upcoming debt payment deadlines, as China’s real estate sector is still distressed and shows no sign of improving in the foreseeable future.
During an announcement on June 15 at Hong Kong Stock Exchange, the firm disclosed that “all offshore refinancing has been stopped” in 2022.
Skyfame Realty further mentioned that raising funding remains challenging, and there is no improvement in offshore refinancing, causing unprecedented liquidity pressure at this stage.
In addition, it said that its sales were affected by the epidemic in China and the continued economic downturn. The firm’s contracted sales in the first five months of this year fell by 63% year-on-year.
The company has two upcoming due notes. One note has a 263 million dollar principal and interest payment due early July. The other note has nearly 19 million dollars interest payment owing in mid-June and 292 million dollars principal due in 2023. Both notes are listed on the Singapore stock exchange.
The announcement noted that if the firm cannot pay the debts due and cannot reach a solution with creditors on time, it might lead to cross-defaulting certain debts.
Skyfame Realty was one of China’s top 100 listed real estate companies in 2021. Its business is mainly in Guangzhou, and its developed properties include residential and commercial properties, offices, hotels and serviced apartments, property investment, and property management.
In the 2021 annual report released in mid-April, Yu Pan, chairman of Skyfame Realty, said that the peak time of China’s real estate has passed, and 2021 was the turning point of China’s real estate development.
Data shows that sales, investment, and new construction areas in China’s real estate market have fallen sharply in the first five months of 2022. Analysts believe China’s real estate is now in a “vicious circle.”
The National Bureau of Statistics of China released official data on June 15, stating that from January to May this year, China’s commercial housing sales area and sales volume fell by 23.6% and 31.5%, respectively. The new construction area of houses decreased by 30.6% in the first five months.