After more than a decade of boom, China’s real estate industry is now facing a serious market slump. Many small to medium-sized real estate development firms have filed for bankruptcy this year. And many large developers are drowning in debt, and have to cut prices to boost sales.
Recently, China Evergrande Group, the country’s second largest developer by sales, slashed the price of unsold units by 30 percent in its new condo tower, Future City, in Yueyang of Hunan Province. Angry customers who had purchased units before the price drop and now demanded a refund were beaten up by hired thugs.
The original price of Future City condos was set at 10,000 yuan per square meter ($131 per sq. ft.). The unsold condos were recently reduced to 7,000 yuan per square meter ($91.9 per sq. ft.), a whopping 30 percent drop. Buyers who had already signed contracts with the developer thus suffered a loss of $43,000 for the smallest units of 1,098 sq. ft., and $60,605 for the largest units of 1,550 sq. ft.
A Twitter video posted on Oct. 16 showed a large group of buyers marching to the Future City sales office, holding banners and demanding an unconditional revocation of their purchase contracts.
“Evergrande deceives buyers. We demand a revocation of our contracts,” the group shouted.
In response, Evergrande called in about a dozen thugs to beat up the angry customers. A sales consultant at the company also participated in the beating.
In the Twitter video, onlookers and protesters were heard yelling: “They started the fight! Evergrande openly started the fight.”
A female sales agent who is selling the condo units but who is not affiliated with Evergrande told New Tang Dynasty TV, a sister publication of The Epoch Times, that it is close to impossible that these buyers will be able to get their contracts revoked.
In the first half of this year, more than 270 real estate companies in China went bankrupt. Market research companies estimate that the number of bankruptcies in China’s real estate sector may exceed 500 by the end of this year, and most of them will be small to medium-sized real estate companies.
According to public data, in 2018, fifty-two large-sized Chinese real estate companies—including Vanke, Evergrande, and Country Garden—had a liability to asset ratio exceeding 80 percent, which is an alarming level. Among them, Evergrande’s interest-bearing debt reached 673.2 billion yuan ($95.1 billion), the highest debt of any real estate company in China.