Country Garden sales drop 14.9% as China property slump deepens

Country Garden's May sales extended a prolonged decline as China's property crisis deepened.

Country Garden Holdings Co. reported May contracted sales attributable to shareholders of approximately RMB2.63 billion ($364 million), down 14.9% from a year earlier, as China's prolonged real estate downturn continued to weigh on developer revenue. The contracted sales gross floor area reached about 330,000 square meters, the company said in a filing. Shares of the Hong Kong-listed developer fell 3.5% on Wednesday, with short selling accounting for 16.8% of trading volume.

"The broader real estate slowdown is spilling over into every corner of the industry," said He Shuhua, chief operating officer at Onewo, the property management unit of state-backed developer China Vanke. "Falling home prices have changed homeowners' expectations, and difficulties in collecting fees is a common problem."

Country Garden's latest monthly sales bring its cumulative performance deeper into negative territory. The developer, once China's top homebuilder by sales, has been grappling with a liquidity crisis since 2023 as the property market downturn wiped out demand. The average collection rate at China's top 500 property firms fell to 71% last year from 89% in 2021, according to CRIC, a research firm, reflecting the broader strain across the sector. Industry executives say 2025 recorded the sharpest drop and the trend has worsened since then.

Property Management Fallout Deepens

The sales decline is rippling through the property services industry, where management firms are struggling to collect fees from disgruntled homeowners. China Overseas Property pulled out of projects totaling 55.6 million square meters last year, a 25% increase from a year earlier, while Country Garden's own management unit withdrew from roughly 80 million square meters in 2025. Small, unlisted management firms generally collect less than 65% of fees, according to CRIC.

John Lam, head of China and Hong Kong property research at UBS, said firms typically incur negative cash flow when collection rates drop below 85%. By comparison, US real estate trusts are generally considered uninvestable below that same threshold, said Sam Radwan, chief executive of Enhance International, a Chicago-based real estate consultancy. Apartments in compounds with management deficiencies could lose up to 25% in value, Radwan added.

The deepening sales decline at Country Garden highlights the scale of China's property crisis, which has dragged on for more than four years since the 2021 bubble burst. Nearly a quarter of Chinese households owned at least two homes at the end of 2025, according to a study by Ant Group Research Institute and Xiamen University's School of Economics, suggesting speculative buying that has now turned into a drag on the market. With unsold housing stock totaling a floor area roughly twice the size of Greater London, according to ANZ estimates, developers face mounting pressure from both weak demand and an overhang of vacant properties. Local governments are increasingly intervening in property management disputes, with at least five county-level authorities issuing directives for public officials to pay fees on time.

This article is for informational purposes only and does not constitute investment advice.