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In China, homebuyers are occupying their “rotting,” unfinished properties

In China, homebuyers are occupying their "rotting," unfinished properties
Written by boustamohamed31

GUILLIN, China, Sept 26 (Reuters) – For six months, the home of Ms. Sue was a roomer in a high-rise apartment in the southern Chinese city of Guilin that she bought three years ago, drawn by brochures touting the city’s river views and clean air.

However, its conditions are far from what was promised: unplastered walls, holes where there should be electrical outlets, no gas and water. Every day she climbs and descends several flights of stairs carrying heavy water bottles filled with a hose outside.

“All the family’s savings were invested in this house,” Sue, 55, told Reuters from the Xiulan County mansion compound, her room empty except for a bed covered with a mosquito net, a few necessities and empty bottles on the floor. She declined to give her full name, citing the sensitivity of the matter.

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Xu and about 20 other shoppers living in the 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 homebuyers in 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 builders with financial difficulties stop the construction amid the deep crisis in the country real estate decline.

The Shanghai E-House Real Estate Research Institute estimated in July that stalled projects accounted for 3.85 percent 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 help the property market by setting up rescue funds, buyers like Xu, who have paid deposits up front and are on the hook for mortgages, have been left in the dark.

MORTGAGE STRIKES

The proliferation of unfinished apartments has sparked an unprecedented collective defiance fueled by social media: In late June, thousands of homebuyers in at least 100 cities threatened to freeze mortgage payments in protest of stalled construction.

The overall property market is highly sensitive to cases of unfinished apartments, as 90% of new houses bought in China are bought “off-plan” while still under construction, said Yang Yuejin, director of research at Shanghai E-House.

“If this problem is not resolved, it will affect property deals, confidence in the government and could worsen the debt problems of developers,” he said.

China’s deep property slump, along with disruptions caused by strict anti-Covid measures, are dragging down the world’s second-largest economy just as the ruling Communist Party prepares for its once-in-five-year Congress next month.

“FEAR OF HEAVEN”

Xu bought his 70-square-meter one-bedroom apartment in early 2019, about a year after the developer, Jiadengbao Real Estate, began construction and began selling apartments for about 6,000 yuan ($851) per square meter, which they say will come with amenities such as underfloor heating and a shared swimming pool.

At first, work progressed rapidly, with blocks in 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 confiscated its properties worth 340 million yuan, including a number of apartments in the Xiulan County mansion.

Construction halted in mid-2020, which Sue found out months later, describing her feelings at the time as “paradise falling”.

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

Since the debt crisis erupted in 2021, thousands more homebuyers have been caught in similar predicaments as financially strapped developers went bankrupt or abandoned struggling projects.

FENCE AND UNDERGROUND

Recently, the main block of buildings in Xiulan County Manor was surrounded by a tall blue fence, while the club building advertised in promotional materials was covered in thick bushes. Cement mixers, iron poles and piles of debris were scattered around.

Sue, who is unemployed, said she bought the flat for her only son in the hope he would be able to start a family there. She said her son and 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 hasn’t said anything officially,” she said.

She hopes the Guilin government will step in to help.

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

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 government 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 return home,” Xu said.

(This story corrected the name of the expert in paragraph 9 of Yuejin)

($1 = 7.0508 Chinese Yuan Renminbi)

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Reporting by Eduardo Baptista and Xiaoyu Yin; Additional reporting by Beijing editors and Xihao Jiang; Editing by Lincoln Feast.

Our standards: Thomson Reuters Trust Principles.

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