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Vanke, a Hong Kong-listed property giant, reported a significant annual loss of 49.5 billion yuan (USD 6.8 billion) for 2024, citing falling sales and reduced profit margins despite Beijing's efforts to revive the housing market. The company attributed its challenges to high debt, aggressive expansion, and over-investment. Revenue dropped 26%, and Vanke faced intensified liquidity pressure with substantial debt repayments. Following a leadership shakeup, including the resignation of CEO Zhu Jiusheng, Vanke's property management unit, Onewo, announced the acquisition of full ownership of Shanghai Xiangda for 870.3 million yuan, aiming to secure profitable ventures amid ongoing financial struggles.
Last week, Vanke, a major property firm listed in Hong Kong, reported a substantial annual loss of 49.5 billion yuan (USD 6.8 billion), blaming the sharp decline on falling sales and shrinking profit margins despite Beijing's efforts to revive the struggling housing market. In its filing to the Hong Kong Stock Exchange, the company described 2024 as an "exceptionally challenging year" and expressed regret over the "distress caused" by declining sales, substantial losses, and liquidity pressures. Advertisement
Enormous debt has burdened China's vast real estate sector, once a key economic pillar, and it has faced a prolonged crisis over the past few years. Vanke, partly owned by the Shenzhen government, was China's fourth-largest property firm by sales in 2024, according to CRIC. Vanke admitted it had failed to address its high-debt, high-turnover, and high-leverage expansion model in time, leading to aggressive investment and over-expansion. Last year, the company reported its first annual loss since being listed in 1991, and the loss surpassed its January forecast of USD 6.2 billion.
Revenue for the year declined by 26%, falling to 47.3 billion yuan. The company cited a significant reduction in the settlement scale and profit margins of its development business as key factors behind the losses. Additionally, Vanke's Chief Operating Officer and Executive Vice President Liu Xiao resigned on Monday, citing "work adjustments". Liu will remain with the company, focusing on strategic investment. His resignation follows that of CEO Zhu Jiusheng on January 27, who stepped down due to health reasons. However, reports suggested that public security authorities had detained Zhu, though no details were provided.
Despite Beijing's support measures announced in November, including tax reductions for home purchases in major cities like Beijing and Shanghai, Vanke reported a net loss of USD 4.35 billion in the final quarter of 2024. The company also warned of a concentrated repayment of public debt this year, which would increase its liquidity challenges. Chinese authorities are reportedly considering ways to help Vanke address a funding gap of USD 6.8 billion in 2025.
Vanke's troubles reflect broader issues facing other major Chinese developers, many of whom are struggling with mounting debt. Kaisa and Country Garden, both dealing with winding-up petitions in Hong Kong courts, also reported heavy losses. Kaisa's deficits grew by 48.4% to USD 4.03 billion, while Country Garden's shortfall reached USD 4.5 billion, with total debt climbing to USD 34.9 billion by the end of 2024.
To bolster its financial position, Vanke's residential property management division, Onewo, disclosed plans to acquire complete ownership of Shanghai Xiangda for 870.3 million yuan (USD 119.99 million). Onewo will gain the remaining 55% stake through its subsidiary, Onewo Business Enterprise Space Technology. This move reflects Vanke's strategy to diversify into more profitable ventures as it grapples with ongoing financial distress.
Vanke's losses highlighted the broader challenges within China's real estate sector, which remains burdened by debt, declining sales, and regulatory pressures. The company's future remains uncertain as it explores ways to regain stability amidst severe financial strain.
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