BEIJING – A string of earnings reports from major Chinese property developers released this week is doing little to suggest the sector’s prolonged slump is over, despite a return to profit by debt-ridden Country Garden, which may at first appear to signal a turning point.
Guangdong-based Country Garden, which was once China’s largest developer by contracted sales, swung back into the black in 2025 for the first time in three years. However, analysts said the one-off improvement was driven mainly by debt restructuring rather than a recovery in its core business operations.
Results from other major Chinese developers, including embattled state-linked Vanke, which posted a record loss, and state-owned China Overseas Land and Investment, where profits and revenue fell, suggest that China’s property sector remains under strain.
The most acute phase of developer defaults is likely over and a recent pick-up in second-hand home sales in some major cities is fuelling optimism that the market may be stabilising. Despite these, analysts said the sector continues to grapple with uneven price recoveries, a supply glut and weak home-buyer confidence.
The second-hand homes segment is generally regarded as a more accurate reflection of market forces as prices of new homes tend to be less volatile because developers are typically guided by a price range set by local governments, a practice that is gradually being eased.
On March 30, Country Garden posted a full-year profit of 3.3 billion yuan (S$614.3 million) for 2025, a sharp turnaround from a 32.8 billion yuan loss in 2024. However, its revenue fell 39 per cent to 154.89 billion yuan.
The publicly listed company defaulted in 2023, after which it received support from Beijing aimed at ensuring that homes are completed and delivered to buyers rather than a direct bailout. It went through more than two years of debt-restructuring talks and received a formal sign-off from a Hong Kong court for its US$14.1 billion (S$18.1 billion) offshore debt plan.
“Under its debt restructuring, debt holders were forced to partially write off the carrying value of the debt, resulting in accounting gains,” said Ms Zerlina Zeng, head of Asia strategy at CreditSights.
“The underlying operations remain deeply troubled with sluggish property sales, hefty impairment provisions and continued negative operating cash flow,” she told The Straits Times, adding that the earnings of defaulted developers such as Country Garden are “no longer market movers”.
Mr Xu Tianchen, a Beijing-based senior economist at the Economist Intelligence Unit (EIU), said the completion of the debt restructuring is a positive development as it reduces the company’s financial burden moving forward.
“It at least sent a positive signal that the financial stress has lessened and that worries about a financial contagion across developers are overdone,” Mr Xu told ST.
Over time, developers’ financials will matter less for China’s economy as the market becomes increasingly dominated by pre-owned homes, he added.
In recent years, Beijing has signalled a broader shift in policy priorities that increasingly tolerates volatility in the sector. It was once seen as the backbone of China’s economy and estimated to account for up to 25 per cent of the nation’s gross domestic product, but the country is transitioning away from the sector.
China’s property downturn, now in its fifth year, has been marked by a wave of developer defaults, falling home prices and a prolonged slump in sales, eroding confidence among buyers and investors alike. The property crisis started in late 2020 after Beijing introduced measures to curb excessive leverage among developers and reduce financial risks, which brought an end to three decades of rapid expansion.
Economists have long warned that sustained weakness in the property sector could weigh on consumption as families hold off on spending. Against this backdrop, the latest results from other major developers point to continued stress across the sector.
On March 31, Shenzhen-based Vanke, a state-linked developer long seen as one of the country’s safest bets, posted a record loss of 88.6 billion yuan in 2025, marking its second annual loss since its listing in 1991.
The company said in the earnings release that it is seeking a long-term debt resolution plan and pledged to actively find new sources of funding in 2026.
The scale of the loss is a sign of the deepening problems plaguing the developer. It is one of the few big Chinese property developers that have avoided a default so far, but it has been struggling with severe liquidity pressures since 2024.
In late January 2026, Vanke received approval from bond holders to push back repayment on debt and secured a fresh loan from state-owned Shenzhen Metro Group, a rapid transit company and Vanke’s largest shareholder, giving it some breathing room.
However, Vanke faces more than 11 billion yuan of bond maturities in the coming months. It remains unclear whether Shenzhen Metro will offer any further support to help address this issue.
CreditSights’ Ms Zeng said Shenzhen Metro has effectively shifted from being its “unconditional backstop” to a “structured, collateral-based and open-ended rescuer” as Vanke’s debt is simply too large to absorb indefinitely, even for a state-owned enterprise.
“We cannot rule out a comprehensive debt restructuring of the company,” she said, pointing to Beijing’s emphasis on market-oriented and law-based approaches for the sector, as well as a pattern of bond extensions and pushback from bond holders.
EIU’s Mr Xu said “a reckoning is inevitable” for Vanke, which had “pretended to be a good developer but over time showed its true colours”.
Amid the ongoing downturn, even relatively stronger players are reporting weaker earnings.
China Overseas Land & Investment, a state-owned developer widely seen as financially resilient, on March 31 reported that its revenue declined by 9.2 per cent and net profit fell 18.8 per cent in 2025.
“In such a difficult time for developers, losing less is a win,” said Mr Xu.
“Even though China Overseas sold less, it maintained healthy financials and low leverage, which speaks to the virtue of prudence,” he said. He added that the company is now picking up prime land parcels in Tier 1 and Tier 2 cities that were previously too competitive or expensive as weaker competitors retreat.
Mr Yan Yuejin, deputy director of the Shanghai-based E-House Real Estate Research Institute, said the decline in profits for developers is not unexpected as the market is undergoing a period of adjustment.
“But overall, China Overseas remains among the better performers in the industry,” he said.
Mr Yan said the market generally believes it is in a “stabilising phase”, with activity in the second-hand housing segment picking up in some major cities such as Shanghai in March.
Shanghai in February rolled out easing measures to loosen home purchase restrictions and offer tax exemptions, which prompted renewed interest from buyers.
“Policy effects take time to gradually filter through, which I believe will consolidate this improving trend,” said Mr Yan.