HONG KONG, July 31, 2025 – The Chinese property sector, once a cornerstone of the nation’s economic growth, is grappling with unprecedented challenges as China Evergrande Group teeters on the brink of delisting from the Hong Kong Stock Exchange, while Hong Kong tycoon Li Ka-shing accelerates the sale of properties at significant discounts. These developments signal a broader crisis in China’s real estate market, raising concerns about economic stability and investor confidence in the region.
Evergrande’s Impending Delisting: A Symbol of China’s Property Woes
China Evergrande Group, once the country’s second-largest property developer by sales, is facing delisting from the Hong Kong Stock Exchange after an 18-month trading suspension that began on January 29, 2024, following a court-ordered liquidation. The Hong Kong High Court, presided over by Judge Linda Chan, issued the liquidation order after Evergrande failed to present a viable restructuring plan for its staggering $23 billion offshore debt. The company’s inability to resume trading within the exchange’s mandated 18-month period has now positioned it for delisting, marking a significant fall from its peak market capitalization of HK$400 billion ($51 billion) to a mere HK$2.2 billion at the time of suspension.
Evergrande’s financial distress, characterized by total liabilities exceeding $300 billion, began in 2021 when it defaulted on its offshore bonds, triggering a liquidity crisis that rippled across China’s property sector. The introduction of Beijing’s “three red lines” policy, aimed at curbing excessive borrowing, exacerbated the company’s challenges, halting construction projects and eroding investor confidence. The liquidation process, overseen by Alvarez & Marsal Asia, faces significant hurdles, as 90% of Evergrande’s assets are located in mainland China, where Hong Kong court orders may hold limited sway. Experts suggest that mainland courts are unlikely to recognize the liquidation, prioritizing domestic creditors and ongoing construction projects to maintain social stability.
The delisting of Evergrande, a former titan of China’s property boom, underscores the protracted nature of the sector’s debt restructuring efforts. Over 70% of China’s property dollar bonds, totaling more than $140 billion, have defaulted since 2021, with many developers still navigating complex negotiations with creditors. The liquidation ruling has further dampened sentiment, with analysts warning of potential contagion effects on other developers struggling to avoid similar fates.
Li Ka-shing’s Strategic Retreat: A Bellwether for the Market?
Amid Evergrande’s unraveling, Hong Kong billionaire Li Ka-shing, often regarded as a barometer of market sentiment, has intensified his property sell-offs in both Hong Kong and mainland China. Through CK Asset Holdings, chaired by his son Victor Li, the 97-year-old tycoon has launched developments at steep discounts, signaling a cautious outlook on the region’s real estate prospects.
In April 2024, CK Asset introduced the Blue Coast project in Hong Kong, offering units at prices more than 20% below cost, with the lowest-priced units at HK$18,998 per square foot. The project achieved record-breaking sales, with over 400 units sold on its first day, generating HK$7.5 billion. Notably, 30% of buyers were from mainland China, reflecting cross-border demand despite the sluggish market. This followed a similar strategy in August 2023, when CK Asset sold properties at a 30% discount compared to neighboring developments, underscoring Li’s willingness to sacrifice margins to liquidate assets.
Li’s moves have sparked debate about his confidence in the long-term growth potential of Hong Kong and mainland China’s property markets. Historically, Li’s investment decisions have been closely watched by investors, with his shift away from China between 2010 and 2015 prompting criticism from state-affiliated media. His return to the region in 2020, including bids for land in Guangzhou and the Evergrande Centre in Wan Chai, suggested a renewed optimism. However, the current wave of discounted sales may indicate a strategic retreat, aligning with Warren Buffett’s adage: “Be greedy when others are fearful, and be fearful when others are greedy.”
Analysts are divided on the implications of Li’s actions. Chen Jinsong, chair of Shenzhen World Union Group, argues that Li’s discounted sales reflect a seasoned understanding of market cycles, positioning him to capitalize on future opportunities when the slump ends. Others, however, interpret the sell-offs as a lack of confidence in a market burdened by oversupply, falling prices, and regulatory uncertainty. Chinese new home prices declined at their fastest pace in eight months in June 2025, further straining developers’ balance sheets.
Broader Implications for China’s Economy
The confluence of Evergrande’s delisting and Li Ka-shing’s property sales highlights the fragility of China’s real estate sector, which accounts for approximately 20% of the nation’s GDP. The property crisis, initiated by Evergrande’s 2021 default, has contributed to a broader economic slowdown, with China recording a GDP growth of just 5.2% in 2024—the slowest in three decades, excluding pandemic years. Stock markets in Hong Kong and mainland China have lost about 10% of their value in 2025, reflecting an exodus of foreign investors and declining confidence.
For Evergrande, the liquidation process is expected to be protracted, with limited immediate impact on its mainland operations. However, the ruling sends a stark warning to other developers, such as Sunac China and Kaisa, which are also navigating debt restructurings under Judge Chan’s oversight. The prioritization of mainland creditors over foreign ones could further deter international investment, with foreign direct investment in China already declining by 8% in 2024.
Li Ka-shing’s sell-offs, meanwhile, may exacerbate downward pressure on Hong Kong’s property prices, where the removal of cooling measures in early 2024 has failed to revive demand. His actions could prompt other developers to follow suit, potentially flooding the market with discounted properties and further eroding values.
Conclusion: A Market at a Crossroads
As Evergrande faces delisting and Li Ka-shing offloads assets, China’s property sector stands at a critical juncture. Evergrande’s collapse serves as a cautionary tale of over-leverage and regulatory tightening, while Li’s strategic maneuvers reflect the challenges of navigating a market in decline. Together, these developments underscore the need for robust policy interventions to stabilize the sector and restore investor confidence.
Beijing has introduced measures to ease developers’ cash flow, including loosening borrowing restrictions, but analysts argue that more targeted and forceful actions are required. For now, the property crisis continues to cast a long shadow over China’s economy, with Evergrande’s fate and Li’s calculated retreat serving as stark reminders of the risks inherent in a once-booming sector. Investors, both domestic and international, will be watching closely as the market seeks a path to recovery.