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Chinese buyers lose faith after Evergrande collapse

STORY: In the northern Chinese city of Shijiazhuang, a massive apartment complex lies unfinished behind a fence.

For the industrial city’s 11 million residents, it’s a daily reminder of the collapse of China’s once-largest developer, Evergrande.

Construction on the Central Plaza project promised 1,800 new homes.

But the project stalled in 2021 after China Evergrande Group defaulted.

This 38-year-old resident, who declined to give his name, paid more than $350,000 for two units.

"In the winter of 2017, I spent 2.5 million yuan ($352,034) to buy two apartments. The project was intermittently halted in 2020 due to issues with resettlement housing and debt, leading to a complete stop after Evergrande's financial troubles became public at the end of 2021. The total sales volume of this project was around 2 billion yuan ($281,627,200), affecting probably over 1,000 homes, although I don't have the exact figure. As of now, the main contractor has pulled out, and the project's progress is painfully slow. Despite the government's attempts to push forward, the effects have been barely noticeable, and we seem to have no other way to resolve this issue."

A government notice on the site says the project is seeking a new developer.

But that doesn’t help buyers, who paid in full years ago and are now waiting for a lifeline.

At the end of January a Hong Kong court ordered Evergrande to be liquidated, but the process could take years.

Evergrande has said the company would work to finish ongoing projects despite the order.

Meanwhile China has said that the completion of unfinished homes is a policy priority.

But the anonymous buyer says he’s now “lost faith” in the company’s management capabilities and will "never invest" in China again.

Investment bank Nomura estimates there are around 20 million unfinished housing units across China left by Evergrande and other failed developers.

Their report estimates the funding gap for completing these projects stands at around $446 billion.

State-owned developers and local governments have recently taken over some stalled projects under a government-run policy in recent months, according to official announcements and media reports.

China has not disclosed how much funding has been provided to complete these stranded developments or the number of projects authorities have taken on.

Reuters could not verify the total number of unfinished Evergrande projects in Shijiazhuang.

Evergrade did not reply for request for comment.