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Stranded passengers at Heathrow Terminal 5 in London on Friday, March 21, 2025.
HARD NUMBERS: Fire closes Heathrow, Israel fires Shin Bet chief, Turks protest political arrests, EU postpones tariffs, Home sales surge, American happiness drops
1,300: Traveling through the UK will be hectic today after London’s Heathrow Airport, which handles roughly 1,300 flights per day, unexpectedly closed overnight due to a power outage. The airport, one of the world’s busiest, will remain closed until 11.59 p.m. tonight following a fire at a nearby electrical substation, which supplies the facility’s power. Thousands of travelers have been left stranded.
40,000: Israel’s cabinet on Friday unanimously voted to dismiss Shin Bet chief Ronen Bar, marking the first such removal in the country’s history. The move intensifies Israel’s political and constitutional crises, as Bar was investigating Netanyahu’s aides over alleged payments from Qatar, and critics fear Netanyahu will appoint a loyalist to politicize the agency. The long-anticipated decision was met with over 40,000 people protesting in Tel Aviv and Jerusalem.
1,000’s: Thousands of Turks are protesting the detention of Istanbul Mayor Ekrem Imamoğlu, a key rival of President Recep Tayyip Erdoğan, after he was arrested Thursday on graft and terrorism-related charges. Opposition leaders have condemned Imamoglu’s arrest as a political coup, and he posted to X, “We must stand against this evil as a nation.”
50: The European Union has postponed two sets of retaliatory tariffs on US products, including a 50% levy on American whiskey, from April 1 to mid-month. According to EU spokesperson Olof Gill, the delay represents a “slight adjustment” to allow more time for negotiations. American tariffs against a wide range of EU goods are still set to take effect on April 2, though their exact amount remains unknown.
4.2: US existing home sales surged 4.2% in February, despite higher mortgage rates, upending expectations that sales would drop by a monthly rate of 3.2%. But sales remain below levels from a year ago, and homes are taking longer to sell as high prices and borrowing costs continue to deter some buyers.
24: The United States fell from 23rd to 24th place out of 147 countries – its lowest ranking ever – in the annual World Happiness Report, which was released Thursday. Finland remains the happiest nation for the eighth year in a row, followed once again by Denmark, Iceland, and Sweden.
Aerial photo shows a residential area of Evergrande in Nanjing, East China's Jiangsu Province.
Evergrande’s last stand delayed
Embattled Chinese property developer Evergrande Group was meant to be in a Hong Kong court today, facing the once-unthinkable prospect of liquidation. The real estate colossus, which owns 1,300 projects in over 280 cities across China, has seen its shares plummet by 99% after the company defaulted on its $300 billion debt in 2021.
Since then, lawyers have come before bankruptcy judge Linda Chan seven times to attempt a restructuring, without success. She had indicated this was likely their last hurrah, but the developer was unexpectedly granted an adjournment on Monday to Jan. 29, 2024, giving it more time to finalize a revamped offshore debt-restructuring plan. If they fail, bankruptcy would have huge repercussions for shareholders, property owners, and the Chinese economy.
Shareholders: Unwinding Evergrande’s business structure could take years and provide little return for investors. The group has three companies listed on the Hong Kong Stock Exchange, including its holding company, as well as thousands of subsidiaries in China in a range of industries, such as electric vehicle manufacturing, life insurance, and sports entertainment.
Homeowners: Across China, an estimated 1.5 million Evergrande customers have been saddled with unfinished homes. In a country where real estate accounts for 80% of household wealth and 30% of the economy, the concern is that Evergrande is simply “too big to fail.” To staunch the bleeding, Beijing’s regulators have drafted a list of 50 developers eligible for financing support.
Financial institutions: Evergande’s troubles have produced a “contagion effect” from real estate development to real estate financing and a similar crackdown by authorities in that sector. Police are now investigating Zhongzhi Enterprise Group, a major shadow bank in China that lent billions of yuan to developers and is now insolvent with up to $64 billion in liabilities.
Hui Ka Yan, chairman of Evergrande Real Estate Group Ltd, at a news conference in 2016.
From Evergrande to Nevergrande?
Troubles are growing for Chinese property development giant Evergrande. Last Thursday, trading of the company’s shares and those of two subsidiaries was suspended, and authorities accused Evergrande Chairman Hui Ka Yan of “illegal crimes.” Evergrande’s stock price has now plunged by 99% from its peak amid concerns that the company will not be able to restructure and repay its $300 billion debt after filing for bankruptcy protection in August.
Observers believe Hui’s lavish lifestyle – he flaunted a yacht, jets, and an estimated $42.5 billion fortune – displeased President Xi Jinping as Evergrande’s financial woes damaged China’s economy and created potential for social unrest.
This past year, thousands of Evergrande purchasers stopped paying their mortgages, while others organized protests as the embattled company paused construction on hundreds of projects. Multigenerational families who pooled their savings to buy property fear being left “with nothing” while young couples are delaying home purchases. They are not just angry with Evergande, but with the government they believe allowed this crisis to happen. Hence, Beijing is cracking down.
What’s next? Evergrande has been trying to get creditors' approval to restructure offshore debt worth $31.7 billion. Due to the regulatory investigation announced last week, it cannot issue new debt, putting those plans in jeopardy. A major group of Evergrande offshore bondholders now plan to join a liquidation petition, which will be heard in Hong Kong on Oct. 30, unless Evergrande can present a new restructuring plan before then.
Observers believe it is unlikely Beijing will intervene to prop up the company. But the government may move to liquidate Evergrande, as it has done with other failing businesses, though none on this large a scale. Such an action would take Evergrande’s debt down to zero, causing huge losses to its overseas lenders.
The next economic crisis Larry Summers is worried about
On GZERO World, Ian Bremmer and former US Treasury Secretary Larry Summers discuss the policy response to the recent banking crisis involving Silicon Valley Bank and the Biden administration's actions.
Summers rates the government's move to step in and guarantee depositors in SVP positively but expresses concern over the high cost of the SVB bailout.
He also worries about the real estate sector, particularly the office building sector and corporate lending to mid-size businesses.
Watch the GZERO World episode: The banking crisis, AI & Ukraine: Larry Summers weighs in
Episode 4: Is now the time to buy? Real estate dynamics in 2022
Listen: As the global pandemic surged in the US, so too did home sales and home prices. On the flip side of things, commercial real estate took a hit as workers increasingly worked from home. As interest rates rise, we look to see what markets are still hot, which are cooling, and what impact this important sector has on the larger economy.
The latest episode of Living Beyond Borders, a special podcast series from GZERO brought to you by Citi Private Bank, looks at the current state of real estate in the wake of a global pandemic, when tight supply and skyrocketing demand left many homebuyers in intense bidding wars, and companies worried about long-term leases on office space that sat idle while workers went remote. Moderated by Shari Friedman, Managing Director of Climate and Sustainability at Eurasia Group, this episode features Dan O'Donnell, Global Head of Alternative Investments at Citi Global Wealth, and Cassandra Spratt, Chief Operating Officer at Eurasia Group.
Dan O'Donnell
Global Head of Alternative Investments at Citi Global Wealth
Shari Friedman
Managing Director of Climate and Sustainability at Eurasia Group
Cassandra Spratt
Chief Operating Officer at Eurasia Group
What COVID-19 has meant for home sales & prices
Betty Liu, Executive Vice Chairman for NYSE Group, explains:
How has the housing market reacted to the COVID-19 pandemic?
So, as you can well imagine, when stay-at-home orders are put in place, the housing market just dried up. Sales fell dramatically. Existing home sales in the month of April dropped nearly 18%. However, home prices actually continue to still rise. The median price for an existing home in the United States was $286,000. That was a rise of 7.4% from April of 2019.
Why haven't we seen home prices drop due to all this economic uncertainty?
So, as I mentioned, demand fell sharply for houses, existing houses in the United States during this COVID pandemic. And you don't need an economics degree to know that when demand falls, that means prices drop as well. But that didn't happen this time around. And the reason is because supply also fell as well. So, that basically left the supply-demand relationship unchanged.