Analysis of Real Estate Investment Risks: A Case Study of Evergrande’s Bankruptcy and Its Implications

Abstract

Real estate investment is characterized by high capital intensity and long cycles, making it inherently exposed to multiple risks such as policy supervision, market supply-demand fluctuations, and cash flow volatility. These risks not only cause asset depreciation for individual investors and business crises for enterprises but also pose severe threats to regional real estate market stability and even the overall financial system. Taking Evergrande Group’s bankruptcy as a typical case, this paper systematically analyzes the internal causes of the crisis, including high-leverage debt risks, inefficient diversification, and governance failures. It also explores external factors such as the industry downturn cycle and the policy-market feedback loop. Furthermore, the paper examines the spillover effects, such as over 800 suspended projects affecting more than 3 million homebuyers and a 35% non-performing loan ratio for commercial banks related to Evergrande. Finally, it puts forward multi-dimensional implications for corporate governance, industry transformation, and financial supervision. This study aims to provide practical references for real estate investors to avoid risks, enterprises to optimize risk control systems, and regulatory authorities to maintain market stability, thereby promoting the industry’s shift toward high-quality development.