Evergrande to complete 600,000 homes in 2022
When property developers could not complete homes which buyers have paid for, it’s a lose-lose situation for both the developer and the buyer. The developer will no longer in operation. The buyers would now have uncompleted homes which they will have to continue paying for because the home would have been purchased with a home loan.
This is why governments would do their part to ensure the developers do complete the homes versus just shutting down the property developer as soon as they face financial difficulties. Here’s one news which is now famous all over the world. It’s about Evergrande.
Evergrande is property developer with over US$300 billion in liabilities (as per article below) and has been struggling to repay creditors, suppliers and deliver homes. However, it does seem that there is some light at the end of the tunnel. At the moment, no one knows how long is the tunnel. Latest update as below.
Article in thestar.com.my China Evergrande Group chairperson Hui Ka Yan said that it will resume construction and said that there would be no fire sales.
By February 2022, it will resume fully (100%) of all its current construction work across China. This is in comparison with 93.2% at the end of 2021.
It aims to deliver 600,000 apartments in 2022. Evergrande started having trouble in repaying its suppliers and creditors in June 2021. Please do read the full article here: Article in thestar.com.my
Over-leveraging and unforeseen circumstances
Imagine we bought a home by over-stretching financially and then Covid-19 arrived and we were retrenched. Two things happened. We over-leveraged and unforeseen circumstances happened. If we did not over-leveraged, we could have been able to hold on longer. Meanwhile unforeseen circumstances will continue to happen.
It could be a financial crisis which did not start from within the country. Example, the Mortgage Crisis in 2008. It could also be a pandemic like the current Covid-19. This is why, investment must always be in-tandem with a calculated risk and over-leveraging will always be super dangerous and we may just lose it all and have to restart. There are no such thing as risk-free investment.
For the 600,000 new apartment owners’ sake, I hope what Evergrande has announced will come true in 2022. No idea what would happen to the property market by the end of 2022 but having a completed home versus not having a home is a super easy decision. Stay the course yeah.
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