Evergrande shares placed in trading halt after luxury island demolition order

Troubled Chinese property giant Evergrande’s shares have been suspended from trading on the Hong Kong stock exchange.

The company did not give a reason for the halt.

The news came after Chinese media reported that Evergrande had been ordered to demolish 39 luxury apartment buildings on the tropical island of Hainan within 10 days.

The Ocean Flower Island project, a mega-resort under development by Evergrande, consists of three reclaimed Islands in Danzhou in Hainan province.

The 39 buildings are located on island number two, which is for residential purposes.

It is estimated the apartments are worth about 7.7 billion yuan ($1.7 billion).

Chinese media reported the planning permit for the apartments was “obtained illegally” and had been “revoked”.

Local authorities said in a court order issued on December 30 that the project “violated” the urban and rural planning law.

The ABC has approached Evergrande for comment.

The Ocean Flower Island project has a total investment of 160 billion yuan ($35 billion), including exhibition centres, museums, water parks and shopping malls.

It is not the first time the project has been in trouble with local authorities.

In 2019, the project was fined 215 million yuan ($47 million) for “illegal conduct” and was ordered to rectify it, Chinese media reported.

Last Thursday, Evergrande’s shares tumbled after the developer failed to pay offshore coupons due earlier in the week.

Once a darling of China’s booming property sector, Evergrande has more than $400 billion in debts, triggering financial woes in the world’s second-biggest economy.

Evergrande chairman Hui Ka Yan vowed in a meeting last month to deliver 39,000 apartments in December, 2021, compared with fewer than 10,000 in each of the previous three months.

Evergrande will face more deadlines in January for both overseas and domestic coupons.

The next grace period for a total of $352 million in coupons expires on January 27.

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