Aussies Brace as ‘Worse Than Evergrande’ Crisis Looms

As one of China’s largest developers teeters on the brink of default, Australia’s property industry is bracing amid fears of another looming cash crunch crisis in the world’s biggest real estate market.

Analysts predict the impact from a potential default by developer Country Garden would be “worse than Evergrande’s collapse”, as it has four times as many projects.

Risland Australia—a subsidiary of the debt-ridden Hong Kong-listed developer—is behind two large-scale residential estates with a planned total of 10,000 housing lots in Sydney and Melbourne.

The undeveloped 150ha portion of one of them—its Windermere estate in the Victorian capital’s west—already has been put on the block with a $250-million price tag.

“This sale allows Risland to rebalance our portfolio and continue to seek out new opportunities to operate in the important Australian market,” Risland chief executive Guotao Hu said in a statement, with no mention of its parent company’s financial woes.

Risland’s other major development is Wilton Greens, a $2-billion, 433ha masterplanned estate in Sydney’s south-west.

Country Garden—led by one of China’s richest women, Yang Huiyan—had liabilities of almost $300 billion at the end of last year.

It currently has less than 30 days to avoid a default after missing a $34.6-million interest payment on two bonds.

Late last week, the company’s share price plunged 12 per cent to a new low after it announced it had “underestimated the market downturn” and was expecting a net loss of up to $11.7 billion for the first half of 2023.

“We’re facing the biggest challenges since our establishment,” Huiyan said after the company’s profit warning. “Although the company has made every effort to rescue itself … the overall operational pressure on the company has only increased.”

China’s former largest private-sector developer by sales volume, it has a workbook of more than 3000 housing projects and until now has weathered the country’s worst property market crisis, which has unfolded following developer China Evergrande’s demise in 2021.

Since then, there has been an exodus of China-backed developers from Australia as well as a pull back in local interests by others—including Poly, Greenland, Dalian Wanda and Yuhu.

Guangzhou-based Country Garden made its move into the Australian market in 2014 and five years later its local operation was rebranded Risland Australia after a restructuring of its international property development business.