China South City Holdings Ltd., one of the nation’s largest real estate developers, has been ordered by a Hong Kong court to shut down and liquidate its assets, marking the biggest such collapse in China’s property market since the unwinding of Evergrande. The ruling underscores how the ongoing, years-long crisis in China’s property sector continues to claim major industry players and destabilize the broader economy.
Shocking Precedent: Largest Liquidation Since Evergrande
The liquidation order, handed down on August 11, 2025, places China South City in the spotlight as the largest builder by assets to be wound up in recent times. This follows numerous rounds of debt restructuring talks that failed to win creditor support and comes after the developer struggled to recover from the impact of China’s multi-year real estate turmoil.
China South City, once a symbol of the sector’s growth ambitions, had faced mounting financial distress after years of falling home sales, tightening government regulation, and shrinking access to funding. A stimulus blitz in 2024 provided little traction, as market confidence and consumer demand remained weak.
An Ongoing Sector Crisis
This liquidation is not an isolated event but a symptom of a much larger malaise. Since early 2024, home prices in China have plunged about 30%, erasing approximately $18trillion in household wealth, according to Bloomberg analysis. Fitch Ratings recently warned that property sales may decline another 7% in 2025, and a Reuters analyst poll suggests prices could fall by nearly 5% this year, with market recovery increasingly delayed. Even iconic developers like Vanke and New World Development have reported historic losses.
The crisis has roots in Beijing’s “three red lines” policy, which began in 2020 and severely curtailed the sector’s borrowing capacity, exposing deep-seated dependence on debt and speculative sales. Policy interventions, including government rescue attempts and mortgage rate cuts, have only partially eased distress for major builders, while most smaller firms remain exposed and vulnerable.
Ripple Effects and Uncertainty
The fallout from China South City’s liquidation is expected to reverberate through the sector and beyond. With the property market historically accounting for up to a quarter of China’s GDP, continued instability threatens operating businesses, local governments and the livelihoods of millions tied to the real estate value chain.
Global financial markets and regional property investors are also keeping a close watch, as confidence drops and capital shifts towards perceived ‘safe havens’ and overseas opportunities.
“The liquidation order shows how China’s years-long property crisis continues to shake one-time giants of the real estate industry.” – Bloomberg Law
Outlook
As Beijing recalibrates its policy response and developers scramble to stay solvent, China’s property crisis is likely to persist. The winding-up of China South City is a stark indicator that the sector’s troubles are far from over, and that further shakeouts may be imminent unless there is a broad-based and sustained recovery in housing demand and financing conditions.
