Property developers are accelerating debt restructuring efforts. Recent data from the China Index Academy shows that as of October this year, 21 high-risk developers have resolved approximately 1.2 trillion yuan in debt, significantly alleviating short-term repayment pressures. These developers are employing various methods to reduce liabilities and improve balance sheets, contributing to industry-wide risk mitigation.

Among the key players, COUNTRY GARDEN, SUNAC, and others have recently conducted votes on offshore debt restructuring, with some plans already receiving creditor approval.

This round of debt resolution has drawn market attention because most restructuring plans no longer focus solely on extensions but instead prioritize direct debt reduction, offering developers a chance to "reboot" by slashing liabilities. Previously, negotiations were heavily skewed toward creditors, but as market conditions remain challenging, creditors have lowered their expectations for repayment rates.

With reduced debt burdens, some developers previously facing liquidity issues have resumed investments. This indicates that well-managed debt negotiations can secure a foothold in the current market, and if conditions stabilize, these firms may regain momentum.

**Large-Scale Debt Reduction** Most developers are now in a second round of negotiations with creditors, seeking to lower principal repayment ratios to ease financial strain.

For example, COUNTRY GARDEN is restructuring both onshore and offshore bonds. Public data shows negotiations for nine onshore bonds, totaling 13.4 billion yuan, are nearing completion, with eight already approved by bondholders.

Offshore, COUNTRY GARDEN aims to cut approximately $11.6 billion in debt, extend maturities to 11.5 years, and reduce financing costs from 6% to 2% annually. The restructuring is progressing smoothly, with a creditor vote scheduled for November 5.

A private equity manager holding significant developer bonds noted limited negotiation room: "Even with cash reserves, priority goes to project completions. All restructuring plans look similar—creditors have little choice but to approve."

SUNAC has already secured creditor support for its offshore debt restructuring. On October 14, the company announced that 98.5% of voting creditors approved the plan, covering $8.43 billion in claims (94.5% by value).

SUNAC’s plan converts nearly all debt into equity via two series of mandatory convertible bonds. The first series allows conversion at HK$6.8 per share, while the second, capped at 25% of total claims, starts at HK$3.85 per share. On November 5, the Hong Kong High Court approved the plan, marking its official implementation.

**Returning to Normal Operations** Post-restructuring, developers are seeing lighter financial burdens.

According to Liu Shui of China Index Academy, offshore debt reductions often exceed 50%, with some cases reaching 70%. SUNAC’s second restructuring eliminated offshore debt entirely, while onshore cuts surpassed 50%. Similar reductions apply to other firms like CIFI and Kaisa, significantly easing repayment pressures.

Freed from debt constraints, developers are resuming investment activities.

For instance, Gemdale Group, after repaying 20 billion yuan in public debt in 2024, has resumed land acquisitions in cities like Hangzhou and Shanghai. Chairman Xu Jiajun attributed this to eased debt pressure and improved market sentiment due to policy support.

A mid-sized South China developer executive shared optimism: "Post-restructuring, firms that rode the market boom retain strong confidence. Our chairman expects a return to land auctions within a year or two."

COUNTRY GARDEN’s September management meeting noted improving conditions, citing progress in offshore restructuring and its inclusion in the Hang Seng Composite Index as a "signal of recovering market confidence."

China Index Academy suggests that after completing debt restructuring and project deliveries, many developers will pivot to capital-light businesses like project management, property services, and asset management.

Liu Shui advises that while debt restructuring helps, balance sheets still need adjustment. Capital-light operations, requiring minimal investment and no interest-bearing debt, can restore profitability. Developers’ core strengths—brand, expertise, and operational experience—remain valuable for repurposing existing assets. As the industry shifts from development to operations, property management and asset services offer significant growth potential.