China’s Kaisa forecasts wider first-half net loss due to slower property deliveries, by Reuters

(Reuters) – Chinese property developer Kaisa Group said on Thursday it expected to report a wider net loss for the first half of the year, hurt by a drop in property deliveries and higher impairment provisions allocated to projects.

China’s real estate sector, a key driver of the economy, has been in turmoil since 2021, with home sales down 6.5% in 2023 from a year earlier and 35.9% from their peak in 2021, following a crackdown by regulation of high leverage among developers, which triggered a liquidity crisis.

The slowdown in the real estate market has led to lower deliveries of real estate projects, which in turn has resulted in lower recognized income for developers like Kaisa.

At the same time, many developers are dealing with unsold inventory, delayed projects and declining property values, implying the need to recognize higher impairment losses on property projects.

Earlier this month, partners including Agile Group, Redsun Properties and Sunac China reported higher or similar half-year losses.

Kaisa expects a net loss of 8.8 billion yuan to 9.8 billion yuan ($1.23 billion to $1.37 billion) for the half ended June 30. It reported a net loss of 6.6 billion yuan for the year-ago period.

($1 = 7.1344)