People wait at Wuqing Train Station in Tianjin, on January 8, 2016.
Fred Dufour | AFP | Getty Images
BEIJING – A group of about 1,500 homebuyers in the Chinese city of Tianjin, near Beijing, have yet to see – let alone move into – the apartments they say they paid for about eight years ago.
As is common in China, the Tianjin apartment complex sold out the units before completion. They were promised they would be ready by 2019, but the majority remain incomplete, according to five homebuyers, who spoke to CNBC by phone but asked to remain anonymous for fear of retaliation. Buyers are a mix of people who have paid the full amount up front but also in smaller instalments. Their concerns are just one example of the broader challenges that remain in pockets of China's real estate sector.
After early efforts to recover their money or obtain information about their real estate purchases, a few buyers said police visited their homes, sometimes in the middle of the night.
“I feel like I get scammed all the time,” one buyer said in Mandarin, translated by CNBC.
“My only request is that I be able to return the house and get my money back,” the buyer said. “Even if I could get home, I would feel bad.”
Some buyers said they bought the apartments as a place for their parents to retire, or for their children to attend nearby school. During the eight years of waiting to move, one buyer said a parent died while waiting for the new home, and another said their child grew up and found another school instead.
Buyers demand more money
The developer in this case, Zhuoda Yidu, late last month asked homebuyers to agree to settle the dispute, a copy of which was seen by CNBC.
The document said the apartments could be completed in 2025 or 2026 if buyers agree in the next few weeks to pay any outstanding balances on their property purchases, along with other costs determined by the developer.
The proposal did not offer an alternative, and said properties should be valued at pre-market prices — or about double or more than the current level, according to comparisons with listed brokerage prices. Not to mention eight years of wear and tear and potential disruption to families' life plans.
“The down payment money came from my dad,” one buyer said of a home purchased in 2016. “I can't tell him the house isn't finished. During Covid, I told him there were delays. Now Covid is gone and there's more.” no excuses.”
In addition to paying for that apartment in full, this buyer is still paying a monthly mortgage of about 2,800 yuan for a second apartment in the same complex, which was intended for a relative.
One source said the situation fueled a feeling that no matter how much money was spent, buyers would never get their homes. This person noted that in a group chat of about 500 buyers on social media, nearly 90% rejected the developer's offer.
Zhuoda Yidu was not available for comment, despite CNBC's multiple attempts to contact the company and its representatives via email. A lawyer handling Zhuoda Yidu's bankruptcy and liquidation case referred CNBC to the Tianjin Wuqing District People's Court for comment. The court did not respond to CNBC.
Wang said this is the first time she has heard of homebuyers having to pay more to get their apartments ready.
Before the COVID-19 pandemic, there were sporadic cases of delivery delays, especially in cities like Tianjin, where real estate development surged in 2014 and 2015, she said. She said that at that time local authorities and developers usually found a solution quickly because it involved a lot of money for an average family.
Interest in Tianjin and other areas around Beijing surged before the pandemic as people working in the Chinese capital looked for affordable housing options at a time when prices were near their peak.
Beyond China's recent real estate woes, the homebuyer's dilemma has its roots in a household registration system – called hukou – that dictates where one's children can attend public schools, among other benefits. Cities like Tianjin have also used hukou policies to attract new residents.
But Wang noted an increase in delivery delays post-Covid, as developers struggled to continue work, leading to a “systemic problem.”
China's top leadership said at a meeting in late April that it would continue to work to ensure the delivery of homes and protect the interests of home buyers.
China's Ministry of Housing and Urban-Rural Development and its local unit in Tianjin's Wuqing District did not provide comment when contacted by CNBC for this story.
Developer Zhuoda is far from being one of the largest companies in China. Some homebuyers who spoke to CNBC said they discovered after making the initial payments that the property in question was not necessarily an approved project.
Indicating problems with the project early on, state newspaper Tianjin Daily reported in March 2017 that the same Xiyu Garden project built by Zhuoda Yidu Investment in Tianjin's Wuqing district violated the city's real estate transaction rules by raising money. From buyers without a license to sell commercial housing. The report said that local authorities imposed sanctions and ordered correction. Records accessed via the Qichacha business database showed that Zhuoda Yidu did not obtain licenses to sell commercial housing until August 2018, although it obtained building permits for part of the project as early as 2016.
One homebuyer confirmed to CNBC that after the incident described in the Tianjin Daily report, the buyers were able to obtain a purchase certificate.
Tianjin apartment buyers interviewed for this story said they learned of a failed attempt to have the project listed on the central government's list of unfinished homes (which typically guarantees financing until completion), though it was not clear whether that was due to the project's difficulty. Certified status. Some saw the recent proposed dispute settlement as a reaction to central policy changes, because it served as a path toward completion of construction rather than leaving the project on hold.
Real estate sector problems have also affected the finances of local governments, which previously generated significant revenues from land sales to developers.
Among high-income Chinese cities, Tianjin has one of the highest levels of debt relative to GDP, according to Standard & Poor's Global Ratings.
For many families, real estate represents the bulk of their wealth, often the result of grandparents and relatives pooling their savings.
A homebuyer spent 190,000 yuan on a 90-square-meter two-bedroom apartment worth 700,000 yuan in an unfinished Tianjin residential complex.
This equates to several years of savings. The average per capita disposable income in 2023 for residents of Beijing was 88,650 yuan, and 51,271 yuan in Tianjin, reflecting a much lower cost of living.
“We don't have a lot of money,” the buyer told CNBC. “If we had enough money, we would have bought in Beijing.”
