A man on the fourth floor of an unfinished apartment building looking down at the courtyard of the complex where he thought his future home would be. Jonah M. Kessel/The New York Times
In the video “The Casualties in China’s Economy,” also available in Chinese, Jonah M. Kessel reports on the social pressure that young people face to buy an apartment of their own, and what happens when those investments go wrong. Below, he describes the plight of those whose dreams of home ownership have gone awry.
On the fourth floor of an unfinished apartment building in the eastern Chinese city of Hangzhou, a man stands guard, looking down on the courtyard of the complex where he had thought his future home would be. It is his turn to keep an eye out for the developers who are said to have abandoned the project.
He and the other would-be residents take shifts guarding the area, sleeping in tents and in makeshift rooms. They are defending their protest signs, which they say the developers will tear down if they do not remain vigilant.
“I bleed, I cry,” reads one banner, which is three stories high. “Give back my home, give back my money,” reads another.
Those occupying the space say that nearly 600 families had paid cash advances for apartments at the Xixi Moho complex. But then, they say, the developer sold their shares to another developer, who then sold the property to yet another. The building was never completed, and the families are now trapped in a state of residential and economic limbo.
“Many customers who borrowed money from banks are in trouble,” said Liu Cheng, an unemployed entrepreneur who invested in the project. “If they stop paying off their loan, they will bear legal responsibility from the bank. But what if they keep paying it? They still won’t get an apartment in the foreseeable future.”
Mr. Liu said he invested in the property development because the price seemed reasonable.
“But in the end, we lose both the apartment and our money,” he said. “And now? No one is taking responsibility.”
The situation at Xixi Moho is not uncommon in the area, the protesters say. Or elsewhere in China.
Many real estate developers have financed projects by selling the bulk of the apartments before construction, borrowing from banks and then selling the rest of the apartments during construction. This works well when prices are rising, and it allows developers to earn huge rates of return on their investments.
But the system breaks down when prices fall. After years of steady increases in housing values, prices have begun to decline, and some developers have run out of money before finishing the projects.
Real estate projects accounted for 12.8 percent of China’s economic activity in October, according to the International Monetary Fund. If related activities such as making steel for beams or manufacturing sinks for bathrooms are included, that figure jumps to 33 percent. This means that even small price drops in the real estate sector can have considerable economic implications.
Keith Bradsher contributed reporting, and Sarah Li contributed research.
Source: New York Times