One of China's largest real estate developers just witnessed its shares drop by more than 5 percent on Tuesday. Shares of China Evergrande Group fell in Hong Kong after its tourism resort projects under construction in Wuhan had collapsed. The accident killed six people, with five others seriously injured.
Following the accident, which occurred on Sunday, China Evergrande's shares on Tuesday hit an intraday low of HK$20.65, a 5.1 percent drop from Monday's closing price of HK$21.75 per share.
The building that collapsed inside one of the company's under-development projects reportedly trapped close to a dozen people under heavy rubble. According to Wuhan's crisis management bureau, emergency workers had spent more than 24 hours rescuing the trapped workers and recovering the dead bodies on Sunday.
All of the injured workers are reportedly now in stable condition. Following the collapse, government officials revealed that they will be conducting an investigation into the accident to have a clear view of what had happened.
China Evergrande, China's third-largest developer in terms of assets, is currently developing a massive leisure and tourism resort in Badeng New City, in the middle of Wuhan in China's Hubei province. The construction of the new resort was handed over to a third-party developer, Wuhan Badengcheng Investment, a company that is being backed by China Evergrande.
The proposed resort sits on a property with an area of about 6.7 million square meters, a property that was purchased by China Evergrande for $800 million in 2017.
China Evergrande issued a statement following the accident, stating that it has already held urgent meetings to discuss the incident, including discussion on providing compensations to the victims and safety enhancements for its other sites.
In its own investigation, the company stated that the collapse was likely due to the failure of one of the scaffoldings at the construction site. China Evergrande also stated that it is working closely with government authorities and fully cooperating with its investigation.
Construction accidents have become a major issue for China's property sector, with authorities now closely monitoring sites for safety lapses and other violations. In 2018, the sector had a series of accidents that killed dozens of workers. Cash-strapped developers often resort to shortcuts and cost-cutting measures to accelerate their projects in order to get a quicker return of their investments.
Industry experts have pointed out that some developers have chosen to change their ways as neglecting proper safety protocols could end up costing them more in the long run. Developers found to be violating safety regulations often face stiff punishments and fatal accidents do cause massive delays, adding extra cost to developers.
