What happened in the unfinished abandoned house? As China's real estate crisis continues to spread,
The real estate sector in China is going through an intractable crisis. New Home Sales Slow A home that was not built was unsuccessful. The company is drowning in debt. Unable to find financing to support the project until completion, one of China's largest real estate companies, Evergrande, was declared bankrupt in January. In the midst of these crises it is very interesting how unfinished houses were transformed. How many are there? What is likely to be the case in the future? Here, Investor Science magazine would like to take readers to explore a house that has not yet been completed. Which has been abandoned in China and further directions are as follows: [1, 2, 3]
If you want to consider the possibility of having an unfinished home. A large area in the city of Shenyang is full of abandoned houses, which is an example that explains this well. Shenyang is a second Chinese city about 400 miles northeast of Beijing, where a major project has been proposed by Greenland Group Properties, one of the companies that defaulted on its debts. There was almost no way to finish building the house. The company's project in Shenyang began in 2010 and has been on hold for a few years since then.
A construction project turns into a ghost town in Shenyang. Many areas are lined with unfinished buildings. It was a town where there was no one except farmers who occasionally brought goats to raise. Hopes of completing the house were dashed. When the capital to build a house reaches 230 million US dollars. It comes from being in debt. Real estate companies in China focus on borrowing money to build homes. It allows you to reserve a home before construction is complete. Then use the income from home foreclosures to pay off debt. But when the house was not finished and the number of reservations were not as expected. The company therefore owes both the person who reserved the house and the company that lent the money to build it.
The unfinished housing project in Shenyang by Greenland Group is just a small sample, compared to the many unfinished homes built by giants like Evergrande. The construction of more than 800,000 homes has now been completed. China has 20 million unfinished housing units across the country. Many areas have become abandoned houses reflecting people's broken dreams of having a home. Some people are willing to move into homes that cannot be built. Meanwhile, many people protested losing their mortgage and not getting their homes back.
The unfinished house shows no signs of completion. Real estate companies are gradually going bankrupt. New home sales in 2023 fell by 6% and are likely to decline further in the coming years. These problems have become a major crisis in the real estate industry. This will certainly have a huge impact on the Chinese economy. From now on, we can only wait and see how the Chinese government will deal with housing projects that have turned into mere wasteland. How can this crisis be saved so that it does not escalate and harm the Chinese economy?
Investment Science – Investest
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[1] The Wall Street Journal. (February 20, 2024). Inside a Chinese ghost town of abandoned palaces. Retrieved from https://www.youtube.com/watch?v=lQwc3EBW0Sc
[2] Catherine McLaughlin. (February 23, 2024). The story behind the many ghost towns and abandoned palaces across China. Retrieved from https://www.yahoo.com/lifestyle/story-behind-many-ghost-towns-120000738.html
[3] Bloomberg News. (December 18, 2023). China's real estate collapse hits the middle class's recoverable wealth https://www.bloomberg.com/news/articles/2023-12-17/china-s-shrinking-household-wealth-families-strive-to-save-nest-eggs?embedded-checkout=true
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