(Yicai Global) Feb. 1 -- Forty out of the 68 listed real estate developers in China that have released their 2022 earnings outlooks expect losses and RiseSun is predicted to have the biggest deficit of up to CNY25 billion (USD3.7 billion).

This is the first time for 14 companies, including state-owned giant Beijing Capital Development, Joy City Property, and Overseas Chinese Town, to record annual losses, according to Wind data retrieved on Jan. 31. 

Seven firms are slated to lose more than CNY10 billion. BRC, which has already fallen into a debt crisis, expects its annual loss to expand to nearly CNY22 billion. Jinke Property Group, which has also been having trouble repaying its debts, may lose up to CNY19 billion, marking its first annual deficit.

State-owned enterprise OCT is expected to suffer a maximum annual loss of CNY11 billion yuan, ranking fifth. The sales slowdown and the impact of the Covid-19 pandemic on tourism are the main reasons for the first annual performance failure.

Joy City, which also experienced its first loss, expects the sum to be up to CNY3 billion (USD445 million), ranking 12th. The state-owned commercial property developer said that one of the major reasons for the loss is rent reductions of about CNY1 billion to help out its retailer tenants who suffered heavy revenue declines during the pandemic.

OCT, Seazen Holdings, China Merchants Shekou Industrial Zone Holdings, and Joy City all said that asset impairment has been one of the core reasons for the widening losses. Firms paid high prices for land development rights when the market was still booming but they had to sell inventory at lower-than-expected prices so they were pressured to trim the book value of assets.

Those who have the highest debt risks were hit the hardest, according to property information provider CRIC China. Firms that needed to raise cash to pay back on time were more motivated to cut their sales prices, which in turn caused widening losses. 

The future depends on the degree of market recovery. With the implementation of favorable policies, the scale of real estate developers' asset impairment will shrink in the medium and long term, CRIC predicted. 

Editors: Tang Shihua, Emmi Laine, Xiao Yi