To mark the completion of a residential complex called World City, indebted real estate giant China Evergrande Group held an elaborate red carpet ceremony on Monday, with eight cannons firing confetti in front of a cheering crowd. The company then released a series of images showing newly completed buildings covered in bright red decorations.
A few weeks earlier, Evergrande had been declared in default. The developer has over $ 300 billion in unpaid bills and struggles to repay creditors and business partners. Some in China viewed the company’s celebrations as premature.
For months, Evergrande couldn’t pay its builders, painters and contractors. The company, whose problems have made investors suspicious of China’s once thriving real estate industry, has remained relatively silent as its debt problems sparked panic in global markets and among people across the country who had purchased apartments before their completion.
Construction of over a million homes was stalled, then two weeks ago Evergrande signaled it could no longer continue – officially defaulting after failing to pay the last debt payment to investors foreigners. Now, the developer has pledged to start paying workers again and delivering homes, as part of an initiative to restore confidence in the company and the sector.
“We are going to sprint at full speed,” Xu Jiayin, the billionaire founder of Evergrande, told senior executives on Sunday, according to a statement. He did not provide any details on the source of the money, nor on the non-payment of foreign creditors.
Despite the company’s optimism, the challenges it faces remain enormous. Some homebuyers say they are still in the dark about their unfinished apartments. Former employees and contractors continue to await payment arrears. Dozens of business partner lawsuits that have piled up in court remain unresolved. Property sales across China, meanwhile, have fallen for five straight months.
A few weeks ago, government technocrats stepped in to help run the business. The head of China’s Housing and Urban-Rural Development Ministry said last week that Beijing is committed to “guaranteeing home deliveries, protecting people’s livelihoods and maintaining social stability.” With only a few days remaining in the month, Mr. Xu pledged Sunday to deliver 39,000 apartments by the end of the year.
The company also said it has renewed partnerships with more than 80% of its long-term material suppliers and said it will soon be able to pay off debt and start selling new apartments.
Evergrande’s sudden wave of promises has created more questions than answers for homebuyers, suppliers, contractors and creditors who have yet to hear directly from the company. Some people have started to figure out which of the hundreds of Evergrande real estate projects actually restarted construction.
Li Menghe, chairman of Qingdao Wanhe Construction & Decoration Group, an Evergrande glass supplier, has started using his official Weibo account to post daily details of the hundreds of projects that have picked up steam in recent days. Homebuyers respond to his messages with more questions as they try to determine if their apartments are likely to be completed.
A home buyer asked about intermittent construction progress for one of Evergrande’s residential projects in Shandong Province.
“Brother, there is no money in the supervised account,” replied Mr. Li, referring to the escrow account where Evergrande was supposed to place the money he had received in advance from the sale of the apartments. . He did not explain how he knew it, nor did he respond to a request for comment. But in some online government complaints forums, local officials have told homebuyers that developers’ escrow account money is lacking.
Zhang Yao, a yoga instructor who has taught at Evergrande Healthy Land, a health and wellness park in central Henan Province, said she was asked to resign in September but still owed her. $ 750. Ms. Zhang, 29, said she was paid by an employment agency but recently confronted an Evergrande manager, who was unable to give her a date when the company had her. would pay.
She said the manager told her that Evergrande’s own employees had not been paid since October. A representative for the company did not respond to a request for comment.
In September, Evergrande employees joined concerned homebuyers in protest outside the company’s China offices. Some were later arrested or visited by local police. Up to 80 percent of Evergrande employees have been asked at some point to put money in to help finance the company’s operations.
Mr Cao, an Evergrande home buyer who asked the New York Times to use only his last name for fear of being visited by the police, said he made a down payment on an apartment for $ 160. $ 000 in Jiangxi Province which was nearing completion and was supposed to be delivered in January. He doesn’t expect the apartment to be finished on time as there are only about 20 workers a day on the site, he said.
Understanding the Evergrande crisis
What is Evergrande? The Evergrande group, a sprawling Chinese real estate giant, has the distinction of being the most indebted developer in the world. It was founded in 1996 and took advantage of China’s real estate boom which has urbanized large swathes of the country and has millions of apartments in hundreds of cities.
“I think the contractors still haven’t been fully paid,” he said. “If they had had the money, they should have worked faster for sure.”
Amid the uncertainty, the colorful founder of Evergrande, once known to wear a flashy gold-buckle Hermès belt, has been largely absent from the public. In early September, he posed behind senior leaders signing a “military order” pledging to deliver houses. (Over the next several months, Evergrande would finish less than 10,000 units.) In a memo leaked later in the month, he promised employees that they would “come out of obscurity soon.”
Last week, Evergrande released new photographs of Mr. Xu chairing a meeting in which he called on leaders to continue handing over the homes. Then came dozens of photos of suddenly completed apartment projects. Homebuyers were pictured happily signing documents that would allow them to finally take possession of their long-awaited apartments.
Some online commentators have expressed disbelief that Evergrande could suddenly go from the brink of collapse to the status quo, or bristled at the idea that buyers should celebrate receiving homes they had already paid for. .
“Today people are getting so thankful and feel they owe the developer a big favor,” remarked Michael Yu, a popular influencer on Douyin, the Chinese version of TikTok. “What happened to people’s bottom line these days? “
With Evergrande under the leadership of government officials, some homebuyers and investors are likely to feel more optimistic. This week, the company delivered 1,419 apartments in its World City development as part of its drive to complete 39,000 units by the end of the year. But Evergrande is still at the mercy of around 1 million more.