The Chinese real estate crisis has led to a large number of unfinished buildings, leaving buyers in distress. In Tianjin, approximately 1,500 buyers have yet to see the apartments they purchased about eight years ago, let alone move in.
Five homebuyers agreed to be interviewed by the American financial news outlet CNBC over the phone, but requested anonymity due to fear of retaliation. These buyers include those who paid in full as well as those on installment plans.
Some buyers expressed frustration, stating that after their initial efforts to retrieve funds or gather information on their property purchases, police officers showed up at their homes, sometimes in the middle of the night.
“I feel like I’ve been deceived all along,” one buyer told CNBC. “My only request is to be able to return the house and get my money back. Even if I could get the house, I would feel terrible.”
Some buyers mentioned that they had purchased the apartments to provide for their parents’ retirement or for their children’s education in the vicinity. One buyer mentioned that during the eight-year wait to move in, one of their parents had passed away, while another buyer shared that during the waiting period, their children had grown up and found another school to attend.
Chief economist Dan Wang of Hang Seng Bank (China) told CNBC, “I think this once again reflects how deep the dilemma is for real estate developers.”
“What happened in Tianjin is not a unique case,” she said. “I believe there will be more such cases emerging in the near future.”
The developer involved in the Tianjin incident, “Zhuoda Yidu,” requested buyers last month to approve a dispute resolution proposal. CNBC reviewed a copy of the proposal.
According to the document, if buyers agree to pay any outstanding balances on their property purchases in the coming weeks, as well as other fees determined by the developer, these apartments may be completed by 2025 or 2026.
The proposal did not offer alternative solutions but stated that the properties must be valued at prices from before the market downturn—roughly twice the current prices based on comparisons with listed agency prices.
A source indicated that approximately 90% of about 500 buyers in a group chat on social media rejected the developer’s proposal.
CNBC was unable to reach “Zhuoda Yidu.” The lawyer handling the bankruptcy and liquidation case of this developer directed CNBC to seek comments from Tianjin Wuqing District People’s Court. The court did not provide a response to CNBC.
Wang mentioned that it was the first time she had heard of buyers being required to pay additional fees to obtain completed apartments.
Chinese real estate developers have been on a construction spree for several years driven by debt, selling properties before completion. It wasn’t until 2021 that major developers ran into debt crises successively, leading to defaults and stalled construction projects, leaving homebuyers frustrated as they had often invested large sums as down payments in these properties.
Nomura Securities estimated last November that there are about 20 million unsold and delayed delivery presale residential units in China.
In the summer of 2022, owners of unfinished buildings started a movement to refuse to pay mortgage loans. This movement swiftly spread like wildfire to at least 91 cities in China.
Bloomberg cited Assistant Professor Alfred Wu from the National University of Singapore, who researches Chinese governance, saying, “Chinese homebuyers typically pool their entire family’s resources to buy homes.” “If their homes turn into liabilities, it is a matter of life and death for them.”