By Laurie Chen and Xiaoyu Yin
SHIJIAZHUANG, HEBEI - In the heart of the northern Chinese city of Shijiazhuang, a fence displaying the slogan "Happy Every Day" hides an unfinished apartment complex, a daily reminder of the unresolved costs of the collapse of China’s once-largest developer.
Construction on the Central Plaza project that promised buyers about 1,800 new homes stalled in 2021 after China Evergrande (HK:3333) Group defaulted. A government notice on the site says the project is seeking a new developer.
Buyers, who paid in full years ago, have been stuck watching and waiting for a lifeline.
“We seem to have no way of resolving this issue," said a 38-year-old Shijiazhuang resident, who bought two still-unfinished units for more than $350,000 in 2017 and who asked not to be named.
A Hong Kong court on Monday ordered Evergrande to be liquidated, a process expected to take years and to include consideration of some kind of restructuring of more than $300 billion in liabilities.
Evergrande has said it would work to finish ongoing projects despite the order. China has said that completing the unfinished homes is a policy priority.
But the project in Shijiazhuang, an industrial city with about 11 million people, shows the scale and difficulty of working through the overhang of unfinished construction left by Evergrande and just how much its downfall has damaged confidence.
"This has made me lose faith in the housing authorities' management capabilities as well as real estate," the Evergrande home buyer told Reuters.
Shijiazhuang's housing bureau and China's housing ministry did not immediately respond to requests for comment. Evergrande did not reply to a request for comment.
Investment bank Nomura estimated in November there were around 20 million units of unfinished homes across China, left by Evergrande and other failed developers. The total funding gap for completing those projects stood at around $446 billion, the report estimated.
Gavekal Dragonomics, a China-focused research firm, estimated that as of last year, Evergrande had received payments in advance from homebuyers equivalent to about 600,000 housing units.
HOME DELIVERY ‘GUARANTEE’
State-owned developers and local governments have taken over some stalled projects under a government-run "guarantee home delivery" policy in recent months, according to official announcements and media reports.
Reuters could not verify the total number of unfinished Evergrande projects in Shijiazhuang. Last month, the local government announced the completion of 40 out of 44 unfinished housing projects it had taken over in 2021. None of them belonged to Evergrande.
In Shijiazhuang's rural outskirts, construction has resumed on another Evergrande development of 48 residential blocks with nearly 3,600 units, although few workers were on site this week in the run-up to Lunar New Year.
The project includes two castle-like community buildings with decorative spires next to an unfinished retail strip and more traditional apartment buildings that appeared to be nearly finished. Weeds have grown through the yet-unpaved shopping lane.
Workers and two people who identified themselves as local officials said construction had resumed last year after the project was taken over by the local government. A developer-run WeChat page for the project said last month that the masonry on some buildings had been completed.
China has not disclosed how much funding has been provided to complete stranded developments or the number of projects authorities have taken on. China's housing ministry said in August more than 1.65 million pre-sold units had delivered under the programme.
The Shijiazhuang resident waiting for work to resume on the Central Plaza project said buying a new apartment in China was just too risky. He regrets not putting the money he committed to the project to buy a property in Tokyo or Osaka.
"I will never invest in this place again,” he told Reuters.