Chinese property developers must pay nearly $300 billion in debts by the end of 2023 as the ongoing real estate crisis continues.

According to Bloomberg, China’s debt-hit real estate industry has at least $292 billion of due debt payments through the end of 2023. The enormous financial obligations further put pressure on many developers in the sector amid this year’s multiple defaults.

The news outlet cited figures based on Bloomberg and research firm Use Trust calculation, showing that $53.7 billion in loans are due by the end of this year. Then, $72.3 billion in borrowings will be due in the first quarter of 2023. 

Bloomberg cited Henry Loh, head of Asia fixed income at a UK-based abrdn plc, saying, “If we draw parallels from 2022, a lot of the stress began because of the seasonality of payments toward the first quarter.” 

He added, “So undoubtedly, the payment pressure in the first quarter of 2023 will add more stress to what is already a challenging environment.”

China’s property market accounts for around 25% of its GDP. Therefore, as the real estate market slumps, the country’s economy takes a hit due to the sector’s large proportion of the economy. 

The crisis started last year when authorities cracked down on excessive borrowing for growth, a common practice in the industry. 

According to a Bloomberg index, China’s offshore high-yield bond market, mostly from real estate developers, is down 42% this year.

In July, China’s real estate giant Evergrande, the world’s most-indebted firm, failed to deliver a debt restructuring proposal of $300 billion. As a result, it was forced to hand over its headquarters building in Hong Kong to lenders.

Despite multiple efforts from the Chinese Communist Party, such as offering  special loans and funding from major banks, there is no sign of recovery in the sector.

The latest official data showed that the country’s home prices have declined for 13 months, reflecting a dim outlook for the sector.   

In addition, China’s new house sales by floor area reportedly dropped 37.7% from a year ago during the National Day break. Recent house sales by floor area in China’s four major cities plummeted compared with last year’s holiday season.

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