At unfinished Evergrande apartments in central China, buyers seek answers

·3 min read

By Yew Lun Tian

LUOYANG, China (Reuters) - A steady stream of anxious apartment buyers flowed into the sales office of the Evergrande Oasis complex outside the city of Luoyang this week, seeking answers after construction was halted by the giant developer's severe cash crunch.

Work on the five-tower condominium and 16 blocks of apartments at the sprawling development in central China has been halted since August and July, respectively, according to a staff member who declined to give his name.

The complex is among a host of uncompleted homes across the country that have seen work grind to a standstill as result of the crisis engulfing China Evergrande Group

Evergrande, the country's No. 2 property developer, is scrambling to raise funds to pay lenders, suppliers and investors, with regulators warning its $305 billion of liabilities could spark broader risks to the country's financial system if not stabilised.

"We worry that if Evergrande goes bankrupt, its assets could be frozen, and we'll lose the home," said Tan Liangliang, who is part of a social media group of about 200 worried buyers at the Evergrande Oasis project in Luoyang.

Numerous such groups have sprung up for the Oasis project, where the unfinished towers stand near rows of completed and occupied high-rise apartments.

At the 16 blocks, at various stages of completion, cranes lay idle and no workers could be seen. Plastic sheets flapped from some balconies, steel reinforcement bars protruded from others another.

Some buyers said they expected construction to resume this month or next, but others said sales agents had simply told them to wait. The staff member who declined to identify himself said construction would resume in late October or early November but gave no other details.

He said apartments there had been sold late last year for 9,800 yuan ($1,518.81) per square metre, or roughly $197,000 for a 130 square metre unit.

"I collapsed when I heard that construction had halted. How my heart hurts," a middle-aged woman who didn't want to give her name told Reuters outside the sales office. "For regular folks like us, all our life-savings had gone into the house."

Across China, Evergrande has hundreds of thousands of uncompleted units that need to be delivered to buyers, Raymond Cheng, a managing director of CGS-CIMB Securities, told Reuters last month.

Evergrande did not immediately respond to requests for comment on Cheng's figures, the Oasis complex or other halted projects.

Late last month, the company said some projects had been suspended because of delays in payment to suppliers and contractors, and that it was in negotiations with them and coordinating with the government to resume construction.

Early this month, it held a pledge-signing ceremony with project teams across the country, promising buyers that construction would proceed.

"Two years ago when we were deciding which property to buy, we chose Evergrande because we thought it, being such a big brand, won't have cashflow problems like other property firms," another buyer said, declining to give her name.

Buyers are placing their hopes on the government, which has asked Evergrande to guarantee that it can deliver on units sold.

"This is a national issue, I don't think the government will let it blow up," another homeowner said.

($1 = 6.4524 Chinese yuan renminbi)

(Reporting by Yew Lun Tian; Additional reporting by Clare Jim in Hong Kong; Editing by Tony Munroe and Pravin Char)

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