China’s real estate industry has been hit hard by a series of bankruptcies, with even state-owned enterprises unable to escape the fallout, leaving behind a huge number of unfinished buildings. “Ensuring completion of construction” has become the main theme in the real estate sector. Recently, Chinese Vice Premier He Lifeng reiterated the importance of “ensuring completion of construction” in the hard-hit region of Zhengzhou.
Experts analyze that the severe shortage of funds for “ensuring completion of construction” makes it more of a “political mission” rather than a financial necessity.
During his visit to Zhengzhou on April 13-14, He Lifeng conducted research on real estate work and chaired a symposium. He emphasized the need to actively support projects that meet the requirements and ensure they are completed on time. For projects not meeting the criteria, targeted solutions should be promptly provided.
Zhengzhou’s districts of Jinshui and Huiji have been identified as areas with a high concentration of unfinished buildings.
According to a lawyer in mainland China, the choice of Zhengzhou for this initiative is because of the high number of buildings requiring completion, making it a challenging and crucial task.
Zhengzhou has the highest rate of unfinished buildings among major cities in China. In September 2022, authorities announced there were 147 unfinished building projects in the city, affecting over 600,000 residents.
Notable unfinished projects in Zhengzhou include Hengda Yangshenggu, Hengda Lin Xiju, Hengda Yunxi, Kangqiao Longyuanfu, Kangqiao Jiuxiyuan, Sunac Yuhuchen Courtyard Phase III, and more, involving major real estate developers like Hengda, Country Garden, Sunac, Kangqiao, and Xinyuan, which have suffered financial crises.
An academic consultant in Zhengzhou mentioned the financial market issues, particularly in the banking sector. He highlighted that the reckless expansion by real estate developers in Zhengzhou has led to excessive risks due to the current market conditions.
Private or state-owned real estate enterprises are mandated to complete construction, with the government favoring state-owned companies over private ones, shedding light on the complexities of financial burdens.
It was reported that from September 2022, Zhengzhou vowed to ensure the resumption of all unfinished buildings within 30 days, however, the progress has been limited.
Statistics from Zhengzhou Municipal Bureau of Statistics for 2023 revealed a decrease in the construction area, indicating a worsening situation concerning unfinished buildings.
Experts noted that completing unfinished buildings is a top priority in the real estate industry. However, challenges remain, with certain regions like the Yangtze River Delta, Pearl River Delta, and Bohai Rim areas likely to see progress, while other mid-sized cities face significant hurdles.
The burden of taxes and related costs in property development has significantly impacted the market, leading to the current crisis. Imbalanced financial policies by local governments in regard to property taxes play a crucial role in the current predicament.
The issue of unfinished buildings has become a political dilemma, with the Chinese authorities striving to maintain stability amidst economic uncertainties and social challenges.
The real estate market in China has been sluggish, with no immediate solution in sight for the unfinished building crisis. The lingering risks pose a threat to China’s economy and political stability, leaving an atmosphere of uncertainty.
As the situation unfolds, both residents and experts are apprehensive about the future implications of the ongoing crisis in the real estate sector. The completion of unfinished projects remains a daunting task, with no clear resolution in sight.