Heavily indebted developer China Evergrande Group has moved from its previous headquarters in Shenzhen to its own property, in an attempt to save costs as it battles a financial crisis.
The company’s logo on the building where it was previously housed was seen being taken down on Monday.
“To save costs, [Evergrande] went through lease cancellation procedures at the Excellence Houhai Finance Center in December 2021 and [we have] moved to our own property … The company’s registered place has not changed and is still in Shenzhen,” the developer said in a statement on its website on Monday.
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The 43-storey building in the prime Nanshan district of Shenzhen, which Evergrande has vacated, has rents starting from around 280 yuan (US$43.92) per square metre per month currently, according to DiChanDaDang, an online service portal by JLL that is dedicated to commercial real estate.
Evergrande was founded in the southern Chinese city of Guangzhou, after which it moved its headquarters to the tech hub of Shenzhen in 2017. Both cities are located within Guangdong province. It was reported by local media outlet The Paper that while the current headquarters move is within Shenzhen, many staff have been moved to Guangzhou.
“[This] is actually a contraction strategy. It is actually an adjustment under the current special operating pressure,” said Yan Yuejin, research director at Shanghai-based E-house China Research and Development Institute. “Returning to Guangzhou is a return home, which will help to gain more support and resources in future. Moving back will also help the Guangdong government solve the Evergrande problem.”
Real estate companies often do not use their own properties, preferring to lease properties from other companies, said Yan. But in this case, with Evergrande under financial duress, the company can reduce costs by returning to its own property.
China Evergrande is struggling to stay afloat with 1.97 trillion yuan of liabilities, of which at least US$186.1 million in offshore bond payments fall due this month. Another US$2 billion in offshore bond payments are due in March, followed by US$1.045 billion in April. The developer has been pressured as Beijing moved to rein in asset bubbles in the real estate sector and reduce local government debt.
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