Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

In China, home buyers occupy their 'rotting', unfinished properties

Economy Sep 26, 2022 08:47AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
5/5 © Reuters. Unfinished apartment buildings stand at a residential complex developed by Jiadengbao Real Estate in Guilin, Guangxi Zhuang Autonomous Region, China September 17, 2022. REUTERS/Eduardo Baptista 2/5
 
USD/CNY
-1.11%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Eduardo Baptista and Xiaoyu Yin

GUILIN, China (Reuters) - For six months, home for Ms. Xu has been a room in a high-rise apartment in the southern Chinese city of Guilin that she bought three years ago, attracted by brochures touting its riverfront views and the city's clean air.

Her living conditions, however, are far from those promised: unpainted walls, holes where electric sockets should be and no gas or running water. Every day she climbs up and down several flights of stairs carrying heavy water bottles filled with a hose outside.

"All the family's savings were invested in this house," Xu, 55, told Reuters from the Xiulan County Mansion complex, her room bare except for a mosquito net-covered bed, a few necessities and empty bottles on the floor. She declined to give her full name, citing the sensitivity of the matter.

Xu and about 20 other buyers living in Xiulan County Mansion share a makeshift outdoor toilet and gather during the day at a table and benches in the central courtyard area.

They are part of a movement of home buyers around China who have moved into what they call "rotting" apartments, either to pressure developers and authorities to complete them or out of financial necessity, as numerous cash-strapped builders halt construction amid the country's deep real estate slump.

Shanghai E-House Real Estate Research Institute estimated in July that stalled projects accounted for 3.85% of China's housing market in the first half of 2022, equivalent to an area of 231 million square metres.

While some local governments have taken steps to prop up the property market by setting up bailout funds, buyers like Xu, who paid deposits in advance and are on the hook for mortgages, remain in limbo.

MORTGAGE STRIKES

The proliferation of unfinished apartments has sparked unprecedented collective disobedience, fuelled by social media: in late June, thousands of home buyers in at least 100 cities threatened to halt mortgage payments to protest stalled construction.

The overall property market is highly sensitive to cases of unfinished apartments because 90% of new houses bought in China are purchased "off plans" while still under construction, said Yan Yuejin, research director at Shanghai E-House.

"If this issue is not resolved, it will affect property transactions, the government's credibility, and it could exacerbate the developers' debt problems," he said.

China's deep property slump, along with disruptions caused by strict anti-COVID measures, are dragging on the world's second largest economy just as the ruling Communist Party gears up for its once-in-five-years Congress next month.

'CRASHING FROM PARADISE'

Xu bought her two-bedroom, 70 square metre flat in early 2019, about a year after its developer, Jiadengbao Real Estate, started construction and began marketing apartments for around 6,000 yuan ($851) per square metre, which they said would come with facilities such as floor heating and a shared swimming pool.

Work progressed quickly at first, with blocks in the planned 34 tower complex going up one after another.

But in June 2020, Jiadengbao Real Estate hit the headlines after a court accused its parent company of illegal fund-raising and seized 340 million yuan worth of its properties, including a number of flats in Xiulan County Mansion.

Construction stopped in mid-2020, which Xu found out months later, describing her feelings at the time as "crashing from paradise".

Jiadengbao Real Estate did not respond to a request for comment from Reuters.

Since the debt crisis erupted in 2021, thousands more home buyers have been caught in similar predicaments as cash-strapped developers went into bankruptcy or abandoned struggling projects.

FENCING AND UNDERGROWTH

On a recent day, the main block of buildings at Xiulan County Mansion was surrounded by a tall blue fence while the clubhouse, touted in promotional materials, was covered in a dense undergrowth. Cement mixers, iron poles, and piles of debris lay strewn around.

Xu, who is unemployed, said she bought the apartment for her only son, with the hope that he would be able to raise a family there. She said her son and her husband, who live far away in the northern province of Hebei, blame her for their financial predicament, and no longer speak to her.

"We don't know how long we will have to live here because the government has not said anything officially," she said.

She hopes the Guilin government will step in to help.

The city government did not respond to a request for comment from Reuters.

Housing authorities in Baoding, the northern city where Xu is from and where Jiadengbao Real Estate's parent company is registered, said last November the city government and Communist Party committee had set up a group to resolve the issue.

"If the government really wants to protect people's livelihoods, and resume construction, we will go back home," Xu said.

($1 = 7.0508 Chinese yuan renminbi)

(This story corrects name of expert in paragraph 9 to Yuejin)

In China, home buyers occupy their 'rotting', unfinished properties
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
jason xx
jason xx Sep 26, 2022 5:33AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
They are F'd construction stopped almost 3 years with no running services.
Nils Hullmann
Nils Hullmann Sep 26, 2022 1:10AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
this is how stakeholder capital by Klaus Schwab will look like at some point
John Hat
John Hat Sep 25, 2022 10:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The Great Chinese Mirage is collapsing into a nightmare.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email