In China, home buyers are occupying their “rotting”, unfinished properties
By Edward Baptista and Xiaoyu Yin
GUILIN, China (Reuters) – For six months, Ms. Xu’s home 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 riverside views and the city’s clean air.
However, her living conditions are far from the promised: unpainted walls, holes where sockets should be and no gas or running water. Every day she climbs up and down several flights of stairs with heavy water bottles filled with a hose outside.
“All the family’s savings were invested in this house,”[ads1]; 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 case.
Xu and about 20 other buyers who live in the Xiulan County Mansion share a makeshift outdoor kitchen and gather during the day at a table and benches in the central courtyard.
They are part of a movement of homebuyers 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 many cash-strapped developers halt construction in the middle of the depths of the land. property decline.
The 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 meters.
While some local governments have taken steps to prop up the property market by setting up rescue funds, buyers like Xu, who paid deposits upfront and are on the hook for mortgages, remain in limbo.
LOAN STRIKE
The proliferation of unfinished apartments has sparked unprecedented collective disobedience, fueled by social media: in late June, thousands of homebuyers in at least 100 cities threatened to stop mortgage payments to protest halted construction.
The overall real estate market is highly sensitive to cases of unfinished apartments because 90% of new houses bought in China are bought “off-plan” while still under construction, said Yan Yuejun, research director at Shanghai E-House.
“If this issue is not resolved, it will affect real estate transactions, the government’s credibility, and it could exacerbate developers’ debt problems,” he said.
China’s deep property slump, along with disruptions caused by strict anti-COVID measures, is 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 70-square-meter apartment in early 2019, about a year after developer Jiadengbao Real Estate began construction and began marketing apartments for about 6,000 yuan ($851) per square meter, which they said would come with amenities such as underfloor heating and communal swimming pools.
Work progressed rapidly, with blocks of the planned 34 tower complex going up one after the other.
But in June 2020, Jiadengbao Real Estate hit the headlines after a court accused the parent company of illegal fundraising and seized the properties worth 340 million yuan, including a number of apartments in Xiulan County Mansion.
Construction stopped in mid-2020, something Xu found out months later, describing her feelings at the time as “crash from paradise”.
Jiadengbao Real Estate did not respond to a request for comment from Reuters.
Since the debt crisis erupted in 2021, several thousand homebuyers have been caught in similar situations as cash-strapped developers went bankrupt or abandoned struggling projects.
FENCE AND SUB-CHANGE
On the last day, the main block of buildings at Xiulan County Mansion was surrounded by a high blue fence while the clubhouse, highlighted in promotional materials, was covered by a dense undergrowth. Cement mixers, iron rods and piles of debris were strewn about.
Xu, who is unemployed, said she bought the apartment for her only son, hoping 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 difficulties and no longer speak to her.
“We don’t know how long we have to stay here because the government hasn’t said anything officially,” she said.
She hopes the Guilin government will step in to help.
The city council 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 that the city council and the Communist Party committee had set up a group to resolve the problem.
“If the government really wants to protect people’s livelihoods, and resume construction, we will go home,” Xu said.
($1 = 7.0508 Chinese Yuan Renminbi)
(Reporting by Eduardo Baptista and Xiaoyu Yin; Additional reporting by Beijing Newsroom and Xihao Jiang; Editing by Lincoln Feast.)
