Evergrande to Be Delisted Amid Ongoing China Real Estate Turmoil

China Evergrande Group, once the world's most indebted property developer, is set to be delisted from the Hong Kong Stock Exchange on August 25, 2025. This decision follows an 18-month trading suspension initiated on January 29, 2024, after the company failed to present a viable debt restructuring plan, leading to a court-ordered liquidation.

The delisting underscores the ongoing challenges in China's real estate sector, which has been in a multi-year downturn despite government efforts to stimulate demand. Evergrande's liquidation process has been complex, with liquidators recovering only $255 million in assets against $45 billion in creditor claims as of August 2025.

Background on China Evergrande Group

Founded in 1996 by Hui Ka Yan, Evergrande expanded aggressively, becoming China's second-largest property developer by sales. The company diversified into sectors such as wealth management, electric vehicles, theme parks, bottled water, and even owning a soccer club. By 2018, Evergrande was the most valuable real estate company globally.

Financial Collapse and Liquidation

Evergrande's financial troubles began in 2020 when Chinese regulators introduced the "three red lines" policy to curb excessive borrowing in the real estate sector. This policy limited developers' borrowing based on debt-to-cash, debt-to-equity, and debt-to-assets ratios. Evergrande breached all three thresholds, leading to a liquidity crisis.

In December 2021, Evergrande defaulted on a U.S. dollar bond, marking the beginning of its financial collapse. The company's liabilities exceeded $300 billion, and it failed to provide a viable restructuring plan, leading to a Hong Kong court's liquidation order in January 2024.

Asset Recovery and Liquidation Process

As of August 2025, liquidators have recovered only $255 million in assets, a fraction of the $45 billion in creditor claims. Among the recovered assets is a Claude Monet painting, sold as part of the liquidation of non-core assets. The liquidation process has been complex due to most of Evergrande's assets being in mainland China, where legal frameworks prioritize completing unfinished construction projects.

Legal Actions and Penalties

In September 2023, Evergrande's founder, Hui Ka Yan, was detained in China on suspicion of committing crimes. In 2024, the China Securities Regulatory Commission fined Evergrande's subsidiary, Hengda Real Estate Group Company, 4.2 billion yuan (approximately $584 million) for violations, including falsifying financial records. Hui was fined 47 million yuan ($6.5 million) and barred from China's securities markets for life. Additionally, the accounting firm PwC was banned for six months and fined over 400 million yuan ($56.4 million) for its involvement in auditing Evergrande.

Broader Implications for China's Real Estate Sector

Evergrande's downfall underscores the ongoing challenges in China's real estate sector, which has been in a multi-year downturn despite government efforts to stimulate demand. Other major developers, such as Country Garden and Sunac, are also struggling with debt and restructuring. Real estate investment dropped 11% in the first half of 2025, and the sector continues to grapple with structural demand shifts and limited financial channels.

Global Financial System and Investor Confidence

The delisting of Evergrande highlights the broader instability in China's property market, affecting global financial systems and investor confidence. International bondholders have recovered only 0.6% of the nearly $150 billion in bonds defaulted on by China's property developers since 2021. The ongoing crisis underlines the fragmented and uncertain recovery path for China's real estate market, with state-backed firms poised to fare better in the shifting landscape.

Conclusion

Evergrande's delisting serves as a stark reminder of the vulnerabilities within China's real estate sector and the far-reaching consequences of corporate mismanagement and regulatory challenges. The event calls for a reassessment of investment strategies and regulatory frameworks to prevent similar crises in the future.