“Son Unable to Get Married” Country Garden Unfinished Building Buyers in Dilemma

In a report from Nikkei News, a father who purchased an unfinished home expressed his concerns about his son’s marriage being at risk due to the incomplete state of the house. The housing project in Hengyang, Hunan Province, belonging to the struggling Chinese real estate developer Country Garden Holdings, has left this particular homebuyer in a difficult situation.

Hengyang is a fourth-tier inland city with a registered population of 4.45 million. Construction on the residential development project came to a halt in the summer of 2023. A recent visit to the construction site revealed a dilapidated wheelbarrow left idle in the mud and an unfinished gas pipeline trench left unattended.

Another mother surnamed Zhang purchased an apartment in the development area for about 1.5 million yuan (approximately 205,000 USD) due to its proximity to a school. Led by this lady, the homebuyers have united to petition the local government three times a month, demanding the resumption of construction.

Construction briefly resumed, but due to a lack of funds, Country Garden only dispatched a few workers to the site, with some viewing this as a way to stifle protests. “There are more anxious homeowners visiting the construction site than there are workers,” said Zhang, the mother.

Another homebuyer in his thirties surnamed Wu expressed frustration and urged the authorities to expedite the completion of construction. “Our local government promised to finish by the end of March, but so far, there have been several delays, which is simply unbelievable,” Wu said.

Country Garden, once a leading developer in China, has now become one of the largest loss-making enterprises in history. Several major Chinese developers are facing bankruptcy risks.

Last year, sales of 200 major Chinese real estate groups dropped by nearly 30%, a 70% decline from the peak in 2020.

According to UBS estimates, there are 745 million square meters of stalled construction projects in China, equivalent to 7.45 million 100-square-meter homes. If each home accommodates three people, approximately 22 million individuals will be affected.

Zhang, the mother, mentioned that the government’s response to citizen complaints was that property purchases were considered “speculative activities.”

The Chinese Communist Party’s stricter restrictions on borrowing and other areas are believed to be one of the factors contributing to the downturn in the Chinese real estate industry.

In September last year, Nomura Securities’ Chief Economist for China, Lu Ting, stated that due to the pre-sale system, the Chinese real estate market is essentially a futures market rather than a spot market. This distinction is crucial for understanding the current challenges in the real estate market. Many often view the real estate market as a spot market when proposing policy recommendations, thinking the issue lies in building too many unsold homes. However, the reality may be different. Perhaps not too many homes have been built, but too many have been sold, yet remain unfinished.

Lu Ting cited data from Country Garden as evidence, stating that there are about 36,000 unsold completed homes by Country Garden, 730,000 sold but unfinished homes, and 350,000 homes under construction but not yet sold. The ratio between these three categories is approximately “1:20:10.”