Homebuyers in China are snapping up ‘rotten’, unfinished properties

Homebuyers in China are snapping up 'rotten', unfinished properties
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GUILIN, China, Sept 26 (Reuters) – For six months, home for Ms. Xu was a roomer in a high-rise apartment in the southern Chinese city of Guilin three years ago when he noticed brochures showing riverside views.

But his living conditions are far from what was promised: unpainted walls, holes where electrical sockets should be, no gas or water. Every day, he walks up and down several flights of stairs outside with heavy water bottles filled with a hose.

“All the family’s savings were invested in this house,” Xu, 55, told Reuters from the Xiulan County Mansion complex, where his room was bare except for a bed covered in mosquito netting, a few necessities and empty bottles on the floor. He refused to reveal his full name citing the sensitivity of the issue.

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Xu and about 20 other shoppers living in the Xiulan County mansion share a makeshift outdoor toilet and gather at tables and benches in the central courtyard during the day.

They are part of a movement of homebuyers moving into “rotting” apartments around China, either to pressure developers and authorities to complete them or out of financial necessity, as many cash-strapped developers have halted construction amid the country’s deep crisis. real estate crash.

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 231 million square meters.

While some local governments have taken steps to boost the property market by creating rescue funds, buyers like Xu, who paid upfront deposits and took out mortgages, remain in limbo.


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

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

“If this issue is not resolved, it will affect property transactions, the credibility of the government, and this may exacerbate the debt problems of developers.

China’s deep property slump, coupled with disruptions caused by draconian anti-Covid measures, is dragging down the world’s second-largest economy as it prepares for its five-yearly Congress of the ruling Communist Party next month.


Xu bought his two-bedroom, 70-square-meter apartment in early 2019, about a year after its developer, Jiadengbao Real Estate, began construction and began selling apartments for about 6,000 yuan ($851) per square meter. such as underfloor heating and a communal pool.

Work initially moved quickly, with blocks going up one after the other in the planned 34-tower complex.

But in June 2020, Jiadengbao Real Estate made headlines after a court accused its parent company of illegal fundraising and seized 340 million yuan worth of assets, including a series of apartments in a Xiulan County mansion.

Construction was halted in mid-2020, Xu learned months later, describing his feelings at the time as “flying out of heaven.”

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

Since the debt crisis began in 2021, thousands more homebuyers have faced similar hardships as cash-strapped builders went bankrupt or abandoned difficult projects.


Recently, the main building block of the Xiulan County mansion was surrounded by a high blue fence, while the clubhouse featured in the promotional materials was covered with thick bushes. Cement mixing machines, iron poles, piles of garbage were scattered around.

Xu, who is unemployed, said he bought the apartment for his only son, hoping he could raise a family there. She says her son and husband, who live far away in the northern province of Hebei, blame her for her financial difficulties and no longer speak to her.

“We don’t know how long we will live here because the government has not said anything officially,” he said.

He hopes Guilin’s government will step in to help.

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

Housing authorities in the northern city of Baoding, where Xu is based and where Jiadengbao Real Estate’s parent company is registered, said last November that the city government and a Communist Party committee had formed a group to deal with the problem.

“If the government really wants to protect people’s livelihoods and resume construction, we will return home,” Xu said.

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

($1 = 7.0508 Chinese Yuan Renminbi)

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Reporting by Eduardo Baptista and Xiaoyu Yin; Additional reporting by Beijing Newsroom and Xihao Jiang; Edited by Lincoln Holiday.

Our standards: Thomson Reuters Trust Principles.

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