The Existing Crisis of China's Large Real Estate Enterprises and Corresponding Amelioration Strategies Based on Evergrande and Vanke

Abstract

In recent years, large Chinese real estate companies, especially Evergrande and Vanke, have faced an unprecedented financial crisis and development barriers due to a series of regulatory policies introduced by the Chinese government, the decline in housing demand for long-term incentives owing to the increased in household leverage, the high leverage caused by the rapid expansion of real estate companies, and the impact of the COVID-19 epidemic. Consequently, how accurately identifying the deviations and loopholes in policies, finance, marketing models, and development strategies and then coming up with countermeasures is the key for real estate enterprises to broaden their development prospects and maintain industry prosperity. In light of this, this paper expounds on the current situation of the real estate industry from three aspects: the bubble of urban housing prices, the demand side, and the supply side. Additionally, through the analysis of real estate enterprises, this paper summarizes the risks and crises of most large Chinese real estate enterprises, such as policy restrictions on real estate enterprises, difficulties in financing and development, and the impact of COVID-19. Combined with the advantages of the development strategy of non-Chinese mainland real estate enterprises (mainly Sun Hung Kai), the corresponding solutions and suggestions are given as well. With strong universality and practicability, this paper is intended to provide feasible solutions and strategies for the financial and development prospects of large real estate enterprises in China, expecting to give some inspiration and help to Chinese real estate enterprises under multiple adverse factors such as the impact of the epidemic.