Concerns about the Chinese real estate market in connection with the fall in the profits of Country Garden

The Chinese real estate giant suffered a drop in profits in the first half of this year amid the growing crisis in the country’s real estate sector.

Foshan-based Country Garden, China’s biggest real estate company, said its half-year underlying profit fell to between £550m and £612m from £1.9bn a year earlier.

The fall was blamed on a sharp decline in the market, as well as the effects of the Covid-19 pandemic and changes in currency markets.

The dismal results underlined the problems that have engulfed China’s property market since the high-profile collapse of Evergrande last year, which at the time was the world’s most indebted developer with liabilities totaling more than 250 billion pounds.

Unlike Evergrande and others, Country Garden managed to avoid default on its own debt thanks to its ability to access cash from overseas markets.

But now the company and its rivals have faced new difficulties as Chinese homeowners have begun to freeze mortgage payments in protest at unfinished homes, threatening to exacerbate the industry’s cash crunch.

While the government has stepped in with billions of pounds worth of loans to rescue struggling property projects and prop up the industry, investor confidence appears to be falling.

Shares in Country Garden fell more than 5 percent on the Hong Kong Stock Exchange, bringing its losses for the year to nearly 65 percent.

China is considering additional measures to help the battered sector, including efforts to guarantee debt repayments while encouraging people to buy more homes.