Evergrande collapse leaves castles in the sand
● In the heart of the northern Chinese city of Shijiazhuang, a fence displaying the slogan “Happy Every Day” hides an unfinished apartment complex, a daily reminder of the unresolved costs of the collapse of China’s once-largest developer.
Construction on the Central Plaza project that promised buyers about 1,800 new homes stalled in 2021 after China Evergrande Group defaulted. A government notice on the site says the project is seeking a new developer. Buyers who paid in full years ago, have been stuck watching and waiting for a lifeline.
“We seem to have no way of resolving this issue,” said a 38-year-old Shijiazhuang resident, who bought two still-unfinished units for more than $350,000 (R6.6m) in 2017 and who asked not to be identified. A Hong Kong court on Monday ordered Evergrande to be liquidated, a process expected to take years and to include consideration of some kind of restructuring of more than $300bn in liabilities.
Evergrande has said it would work to finish projects despite the order, and China has said completing the unfinished homes is a policy priority. But the project in Shijiazhuang, an industrial city with about 11-million people, shows the scale and difficulty of working through the overhang of unfinished construction left by Evergrande and just how much its downfall has damaged confidence.
“This has made me lose faith in the housing authorities’ management capabilities as well as real estate,” the Evergrande homebuyer said. Shijiazhuang’s housing bureau and China’s housing ministry didn’t immediately respond to requests for comment.
Evergrande didn’t reply to a request for comment. Investment bank Nomura estimated in November there were about 20-million units of unfinished homes across China, left by Evergrande and other failed developers. The total funding gap for completing those projects stood at an estimated $446bn, the report said.
Gavekal Dragonomics, a China-focused research firm, estimated Evergrande had received advance payments from homebuyers equivalent to about 600,000 housing units by the end of last year.
State-owned developers and local governments have taken over some stalled projects under a government-run “guarantee home delivery” policy in recent months, according to official announcements and media reports.
Last month the local government announced 40 of 44 unfinished housing projects it had taken over in 2021 had been completed. None of them belonged to Evergrande. In Shijiazhuang’s rural outskirts, construction has resumed on another Evergrande development of 48 residential blocks with nearly 3,600 units, though few workers were on site this week in the runup to Lunar New Year.
The project includes two castle-like community buildings with decorative spires next to an unfinished retail strip and moretraditional apartment buildings that appeared to be almost finished. Weeds have grown through the yet-unpaved shopping lane. Workers and two people who identified themselves as local officials said construction had resumed last year the local government took over the project.
A developer-run WeChat page for the project said last month that the masonry on some buildings had been completed. China hasn’t disclosed how much funding has been provided to complete stranded developments or the number of projects authorities have taken on.
China’s housing ministry said in August more than 1.65-million pre-sold units had been delivered under the programme.
The Shijiazhuang resident waiting for work to resume on the Central Plaza project said buying a new apartment in China was just too risky, and he should have spent his money on property in Japan instead.
“I will never invest in this place again.”