Chinese developers have suspended the construction of apartment buildings amid the real estate crisis, triggering a widespread mortgage boycott among homebuyers in several provinces and cities across China in recent weeks.
These homeowners have organized protests at construction sites and local government offices, demanding the completion of homes they’ve already paid presale deposits for and started making mortgage payments on.
Protests
On Oct. 10, authorities in Nandayuan township, Baoding city, Hebei Province, announced that a local surnamed Tao, who bought an apartment unit in the housing community called XiuLan Yufeng Garden, had been subjected to “criminal coercive measures” for allegedly “organizing and inciting homeowners” to participate in a rights protest in Beijing. The official release further stated that 15 other individuals had also been punished.XiuLan Yufeng Garden is a subsidiary of Hebei Xiulan Real Estate and has the largest property portfolio in the region. It also holds the top spot for the highest number of unfinished buildings in Baoding city. The developer, Shandong Janbon Holding Group, had promised to complete construction and hand over the units to buyers on Dec. 31 this year. Nevertheless, construction has remained suspended since September 2019, prompting homebuyers to go to Beijing and lodge a complaint.
On Oct. 8, more than 200 homebuyers of the halted Zhongxin International City project in Jinan, Shandong Province, protested at a shopping mall operated by the same developer, Shandong Janbon Holding Group, resulting in confrontations with police.
One homebuyer said the building’s completion was initially scheduled for Sept. 30 but has been postponed, affecting over 1,000 buyers, according to Chinese media reports.
On the morning of Oct. 7, around 200 homeowners from the suspended Kangqiao Nayunxi Phase II development in Zhengzhou city, Henan Province, held a protest. Reports indicate that local authorities detained them that day, but their whereabouts and status remain unknown.
On Oct. 7, a significant number of homeowners from the unfinished Flower Sea Forest development in Dazhu county, Sichuan Province, gathered at the local government building’s entrance to protest and were met with a violent response from the police, leading to the arrest of several protesters, according to Chinese media reports.
Resident Wang Qiang, who opted to use a pseudonym for security reasons, told The Epoch Times that he had heard from locals that the conflict was intense that day.
Waning Confidence
Mr. Wang, a local, acquired an apartment unit in the Flower Sea Forest last year. He told The Epoch Times he was lured in by the promotional offer of “buy one, get one free” that he decided to sign the contract within two hours. But he did not expect that construction of the home would stop.Mr. Wang cautioned against purchasing presold homes in China, stating, “Previously, you could see ongoing construction. But the next day, construction might grind to a halt.”
Jiang Hao (pseudonym), who owns a unit at Wanda Royal House in Tianjin’s Jinghai district, spent more than 2 million yuan ($270 million) to buy the property with the help of his parents. Still, the home was half-built, and he was furious with the developer.
He told the publication that having the house completed would allow him to recoup some of his investment rather than being saddled with a 30-year debt and ending up with nothing.
Mr. Jiang said he has lost confidence in the real estate industry and believes the presale housing policy created this situation.
Unfinished Luxury Mansion in Shanghai
On the eve of Oct. 8, about 20–30 owners of the troubled Binjiang Yipin Yuan development in Shanghai’s Pudong district participated in a protest inside the building, demanding the developer to guarantee the completion of the building. They also used strobe lights to attract public attention.According to protester Liu Yu (pseudonym), the demonstration ended when police arrived at the scene and arrested five protesters. She mentioned that they were able to enter the building because they had received notifications about the event through word-of-mouth in order to avoid police surveillance on phones and social media.
“Police are aware of our protests every time; they monitor our WeChat group, arrive at the locations before us, and often outnumber us,” Ms. Liu, also a homebuyer, told The Epoch Times.
“The homeowners are afraid to discuss matters in the WeChat group,” she added.
Ms. Liu purchased a presale home worth 20 million yuan (about $2 million) in the Binjiang Yipin Yuan development, with a down payment from her and her parents’ savings, plus a bank loan of 1.5 million yuan (about $200,000).
Located on the bustling Huangpu River, the development launched nearly 200 units, with the total price of even the smallest 131-square-meter unit costing almost 15 million yuan (about $2.05 million), as well as a 500-square-meter mega duplex with a total price of 60 million yuan (about $8.22 million).
In 2020, the state-owned company China Cinda Asset joined the project as the largest shareholder, contributing nearly 2 billion yuan (about $274 million) and holding 70 percent of the company’s shares. Shanghai No.7 Construction Co., Ltd. was the general contractor for the project.
However, issues related to a disrupted capital flow led the primary shareholder, China Cinda Asset, to withhold payment for the project with house purchases, resulting in outstanding arrears of 70 million yuan (about $9 million), causing a near-complete halt to the project.
The initial completion dates for the project, initially slated for March 12, 2022, and Dec. 10, 2022, have been pushed back by approximately a year, with no definitive completion date in sight.
Homeowners did not expect a mansion project backed by a state-owned enterprise to encounter such difficulties. In response, they engaged in prolonged protests and, in August of this year, issued a collective statement suspending mortgage payments.
Following multiple demonstrations, which included blocking a district leader’s vehicle and lodging a formal complaint, the local government agreed to establish a supervisory account. This would enable owners to contribute funds to resume construction. However, Ms. Liu said the process is cumbersome and requires approval from China Cinda Asset.
Ms. Liu expressed her frustration, saying, “Defending our rights has been a challenging process as government entities keep shifting responsibility between each other.
“We, as homeowners, have had to use our own money to help ourselves. ... China Cinda Asset initially signed the contract, allowing the release of funds, but their response has been protracted. To date, they have only communicated with three households, which took more than a month,” she explained.
Ms. Liu purchased a home in Shanghai for her elderly parents due to the proximity of two hospitals, which is ideal for them. However, she is now uncertain whether her octogenarian parents will have the opportunity to live in their new home.
“I’m repaying a monthly loan of 70,000 yuan to 80,000 yuan [about $9,000 to $10,000],” she said.
Weak Sales
This year’s Sept. 29 to Oct. 6 is a public holiday in mainland China. September and October used to be the peak season for the property market every year, known as the “Golden September, Silver October.”
U.S.-based economist Li Hengqing believes the surge in home sales has waned due to the overall downturn of the real estate market in China.
Despite increased promotions for home sales across all cities during the extended holiday, the overall results proved disappointing.
Authorities in Heilongjiang Province recently organized 13 real estate companies to attend a promotional event in Nanjing to sell 21 real estate projects and nearly 5,000 suites. Nevertheless, the real estate promotion event didn’t generate any sales.
“China’s real estate market is characterized by ‘supply exceeds demand’; price reduction is an inevitable trend. At this moment, whoever buys a house will lose,” Mr. Li said.
He added that frustration with the real estate industry has left many people reluctant to make home purchases at this time.
