Once considered one of the more financially sound developers, Country Garden is now a bellwether of how the cycle has turned for developers. — Reuters
SHANGHAI: At an unfinished Country Garden residential complex on the outskirts of the northern Chinese metropolis of Tianjin, construction has slowed, and a few idle workers roam a near-empty site.
“They haven’t paid us since Chinese New Year (in January). We are all worried,” said a worker, surnamed Wang, 50, who said he stopped working at the Yunhe Shangyuan site last week.
The sprawling complex is one of two projects in Tianjin, a port city of 14 million people about 135km south-east of Beijing. Both sites are run by Country Garden, China’s largest developer by sales volume before this year, now mired in a debt crisis.
Construction is partially or fully stopped at both sites, the larger one with a few rows of unfinished apartment blocks and the other with lifeless cranes and thick green scaffolding hanging over skeletal high-rises.
Workers on the sites complained of months without pay.
“I’m under a lot of pressure,” said a worker at the Yunhe Shangyuan site, surnamed Wei, also in his 50s, who added that he had only received a one-off living stipend of 4,500 yuan (US$618) so far this year.
“I have a wife and a child who’s about to return to school, as well as elderly parents. Workers can’t live on this.”
Once considered one of the more financially sound developers, Country Garden is now a bellwether of how the cycle has turned for developers.
Its financial woes have added to the debt crisis in China’s real estate sector, which accounts for roughly a quarter of the world’s second-largest economy and is currently losing steam amid a housing slump and weak consumer spending.
A representative of Country Garden’s Yunhe Shangyuan project said in a Wechat statement that its “registered employees” were all being paid.
At the Yunjing Huating site, the government ordered construction to be suspended in June to fix management problems, a project representative told Reuters in a separate statement.
It has since passed inspection, and work is expected to resume next week, the person said, adding the suspension would have no impact on the targeted completion date of October 2024.
“Some workers are not employed directly by the developer, but by a contractor, who has promised to pay the workers’ wages by the end of this month,” the Yunjing Huating representative said.
The project contractor, Shenyang Tengyue Construction, did not respond to calls from Reuters or emails seeking comment.
The housing ministry did not comment on queries about the halting of construction in the property sector in general or Country Garden in particular.
Country Garden has nearly one million homes to complete, according to estimates from Japanese investment bank Nomura. It has not publicly acknowledged whether any of its projects have halted construction due to financial constraints.
In an exchange filing on Aug 10, Country Garden said it would “spare no effort to ensure delivery” of apartments and that it would “ensure the operation of projects nationwide” to fulfill its commitment to home buyers.
Country Garden built its success by quickly selling a large number of units for low margins and by promising “five-star living” in less popular, smaller cities.
Tianjin has about a dozen Country Garden projects, with the majority finished and delivered, said Gao Fei, investment advisory manager at the Tianjin branch of Centaline Property Agency.
Gao said halted construction projects were “relatively rare” in the city, representing about a dozen out of 300 sites for sale, but “there are indeed projects whose development progress has slowed down”. — Reuters
