People wait at Wu Qing Railway Station, 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 said they paid for about eight years ago.
As is customary in China, the Tianjin apartment complex sold the units before they were completed. They were promised to be ready by 2019, but the majority are still unfinished, according to five of the homebuyers, who spoke to CNBC by phone but spoke on condition of anonymity for fear of retaliation. Buyers are a mix of people who paid in full as well as in smaller installments. Their concerns are just one example of the broader challenges that persist in pockets of China’s real estate industry.
After early attempts to recover their money or gather information about their property purchases, some buyers said police visited their homes, sometimes in the middle of the night.
“I feel like I’ve been ripped off this whole time,” one shopper said in Mandarin, as translated by CNBC.
“My only request is to return the house and get my money back,” the buyer said. “Even if I manage to get the house, I’ll feel bad.”
Some buyers said they had bought the apartments as a place for their parents to retire or for their children to attend school nearby. In the eight-year wait to settle, one buyer said one of his parents died while waiting for the new home, and another said their child had grown up and found another school.
Asking buyers for more money
The developer in that case, Zhuoda Yidu, late last month asked the home buyers to approve a dispute settlement, a copy of which was seen by CNBC.
The document said the apartments could be completed in 2025 or 2026 if buyers agreed in the coming weeks to pay any outstanding balances on their property purchases, along with other costs as determined by the developer.
The proposal offered no alternative and said the properties should be valued at pre-recession 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 the potential disruption to families’ life plans.
“The money for the down payment was from my dad,” said one buyer of a house he bought in 2016. “I can’t tell him it’s not finished. During Covid I told him there were delays. Now Covid has gone and there are no excuses.”
In addition to paying in full for this apartment, this one buyer still pays a monthly mortgage of about 2,800 yuan for a second apartment in the same complex, which was intended for a relative.
The situation has fueled a feeling that no matter how much money is spent, buyers will never get their homes, one of the sources said. The person noted that in a group chat of about 500 fellow buyers on social media, about 90% rejected the developer’s proposal.
Zhuoda Yidu was not available for comment, despite multiple attempts by CNBC to call and email the company and its representatives. 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 she was the first to hear that homebuyers had to pay more to get their finished apartments.
He said that before the Covid-19 pandemic there were sporadic cases of late deliveries, especially in cities like Tianjin, where property development surged in 2014 and 2015. He said that at the time local authorities and developers would usually find a solution quickly since 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 more affordable housing options at a time when prices were near record highs.
Beyond China’s recent real estate woes, the homebuyer dilemma is rooted in a household registration system — called hukou — that dictates where one’s children can attend public school, among other benefits. Cities such as Tianjin have also used hukou policies to attract new residents.
However, Wang noted an increase in delivery delays post-Covid as developers struggled to stay operational, resulting in a “systemic problem”.
China’s top leadership said at a meeting in late April that they would continue to work to ensures the delivery of houses and protects 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 China’s biggest. Some of the homebuyers who spoke to CNBC said that after making down payments, they discovered that the property in question was not necessarily a certified project.
In an indication of problems with the project early on, the official newspaper “Tianjin Daily” reported in March 2017 that the same Xiyu Garden project was built by Zhuoda Yidu Investment in Tianjin’s Wuqing District violated the city’s rules on real estate transactions collecting money from buyers without obtaining a commercial real estate sales license. The report said local authorities imposed sanctions and ordered correction. Records obtained through business database Qichacha showed that Zhuoda Yidu had not received permits for commercial residential sales as of August 2018, although it had received construction permits for part of the project as early as 2016.
A home buyer confirmed to CNBC that after the incident described in the Tianjin Daily, the buyers were able to obtain a certificate of purchase.
Buyers of the Tianjin apartments interviewed for this story said they were aware of a failed attempt to get the project on the central government’s list of unfinished housing (which usually guarantees funding until completion), although it was unclear whether this was due to the project certified status. Some saw the latest proposed settlement as a response to central policy changes, as a path to completing construction rather than letting the project hang.
The real estate sector’s woes have also strained local government finances, which once generated significant revenue from land sales to developers.
Among the high-income Chinese cities, Tianjin has one of the highest debt-to-GDP levelsaccording to S&P Global Ratings.
For many households, real estate represented the bulk of their wealth, often the result of pooling their savings from grandparents and relatives.
A home buyer sunk 190,000 yuan into a 700,000 yuan purchase of a two-bedroom, 90 square meter apartment in the unfinished Tianjin apartment complex.
That’s a savings of many years. The average per capita disposable income in 2023 for residents of the city of Beijing was 88,650 yuanand 51,271 yuan in Tianjin, reflecting the much lower cost of living.
“We don’t have that much money,” the buyer told CNBC. “If we had enough money we would buy in Beijing.”