For Chinese property buyers, the Evergrande dream has turned into a nightmare.
Ji Wenchen’s sleepless nights have become the norm six months after she put down a $100,000 deposit on a new apartment that has yet to be built by China’s shaky property behemoth Evergrande.
She paid the money to the company in March, but has yet to receive documentation proving her ownership of the apartment.
The 30-year-old told AFP, “I can barely eat or sleep these days.”
“Evergrande has not turned over my money to the local authorities because my name is not inscribed on the apartment. It should be filed within one month in most cases.”
Ji is one of tens of thousands of ordinary investors whose financial fates are tied to promised windfalls from Evergrande, China’s largest developer, whose ambitious expansion into 280 cities was fueled by a $300 billion debt binge that has put the company on the verge of bankruptcy.
According to Capital Economics, Evergrande has committed to complete 1.4 million properties, resulting in pre-sale liabilities of roughly 1.3 trillion yuan ($200 million) as of the end of June.
However, the company’s plans and debt repayments have been jeopardized as it has failed to sell properties, leaving it with insufficient funds to complete and sell further projects.
It has also been unable to sell assets such as its Hong Kong headquarters and subsidiaries such as China Evergrande New Energy Vehicle Group.
The company issued a statement to the Hong Kong exchange on Tuesday, warning of the “tremendous strain” it is under.
“There is no assurance that the Group will be able to pay its financial obligations,” the statement claimed, as the property behemoth sags under the weight of its massive debts.
The housing firm, which profited from the country’s wealth expansion by riding the investment wave of the 1990s, is now failing to achieve Beijing’s standards imposed last year.
Following years in which China allowed enterprises to borrow significantly in order to expand, the “three red lines” imposed borrowing restrictions and compelled property developers to minimize their obligations.
Many offered appealing incentives to homebuyers to encourage them to sell newly constructed homes.
However, complaints from disgruntled Evergrande investors whose apartments appear to have halted now abound on Chinese social media.
One person commented that he had purchased an apartment in a building in southeastern Kunming that was due to be done in August but was still unfinished and the construction site was unoccupied.
According to photos posted on Weibo, a Chinese version of Twitter, several hundred buyers marched on the Evergrande offices in southern Shenzhen last month. Brief News from Washington Newsday.