According to Bloomberg, Chinese real estate developers have lost at least $90 billion of their stock values and dollar bonds in the property crisis that has been hitting the sector with insolvency and sharp drop in the housing business.

The news outlet reported that since 2022, those Chinese developers have lost about $55 billion in stock value. The Bloomberg bond index shows that dollar bonds of Chinese property firms have fallen by over $35 billion.

China’s real estate market has been struggling for the last two years. As an effort to restore confidence in the industry, Beijing has launched a real estate fund of 300 billion yuan ($44 billion) to help developers. 

However, experts said that the rescue package might not solve the problem.  

Chief China economist at Macquarie, Larry Hu, told Reuters, “I believe the fund would be part of the bigger package to solve the current debt and mortgage crisis because it alone would not solve all the problems. We need a real estate recovery.”

A senior economist at Natixis SA, Gary Ng, told Bloomberg, “The aim of the rescue measures is to save the property market and household confidence, but not the developers.” 

Ng added, “As it is unlikely to see significant policy changes, the golden age of fast revenue growth and high leverage for property developers is probably over.”

China’s property sector has been playing a major driver of its economy for the last two decades. Nikkei Asia cited Harvard University professor Kenneth Rogoff, saying that real estate business activities account for about 29% of China’s gross domestic product, up from less than 10% in the 1990s. 

Rogoff also estimates that a 20% decrease in property-related investments could lower China’s GDP by 5% to 10%. 

China’s developers have been struggling to pay their due debts. There have been 99 defaults on domestic debts so far this year, while defaults on offshore bonds reach $28.8 billion. 

Last month, Citigroup analysts released a research report on July 13. They revealed that homebuyers of 35 projects in 22 cities in China have stopped paying mortgages as of July 12. The analysts cited the delay in construction projects and falling prices in the property market as the major reasons behind the boycott.

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