BEIJING: For six months, home for Xu is a room in a high-rise apartment in the southern Chinese city of Guilin that she bought three years ago, attracted by brochures touting its riverfront views and the city’s clean air.
Her living conditions, however, are far from those promised – unpainted walls, holes where electric sockets should be and no gas or running water. Every day she climbs up and down several flights of stairs to carrying up heavy water bottles.
“All the family’s savings were invested in this house,” 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 matter.
Xu and about 20 other buyers living in 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 group of home buyers 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 numerous cash-strapped builders halt construction amid the country’s deep real estate slump.
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 metres.
While some local governments have taken steps to prop up the property market by setting up bailout funds, buyers like Xu, who paid deposits in advance and are on the hook for mortgages, remain in limbo.
The proliferation of unfinished apartments has sparked unprecedented collective disobedience, fueled by social media. Thousands of home buyers in at least 100 cities threatened to stop making mortgage payments in late June to protest stalled construction.
The overall property market is highly sensitive to cases of unfinished apartments because 90% of new houses bought in China are purchased “off plan” while still under construction, said Yan Yuejin, research director at Shanghai E-House.
“If this issue is not resolved, it will affect property transactions, the government’s credibility and it could exacerbate the developers’ debt problems,” he said.
China’s deep property slump, along with disruptions caused by strict zero-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.
Xu bought her two-bedroom flat in early 2019, about a year after its developer, Jiadengbao Real Estate, started construction and began marketing apartments for around 6,000 yuan (US$851 or RM3,894) per square metre, which they said would come with facilities such as floor heating and a shared swimming pool.
Work progressed quickly at first, with blocks in the planned 34 tower complex going up one after another.
But in June 2020, Jiadengbao Real Estate hit the headlines after a court accused its parent company of illegal fund-raising and seized 340 million yuan (RM218mil) worth of its properties, including a number of flats in Xiulan County Mansion.
Construction stopped in mid-2020, which Xu found out months later, describing her feelings at the time as “crashing from paradise”.
Jiadengbao Real Estate did not respond to a request for comment from Reuters.
Since the debt crisis erupted in 2021, thousands more home buyers have been caught up in similar predicaments as cash-strapped developers go into bankruptcy or abandon struggling projects.
“If the government really wants to protect people’s livelihoods and resume construction, we will go back home,” Xu said. — Reuters
