Rushed Housing Projects Prompt Safety Concerns
With news of the construction-related deaths hitting the market, the recent decline in quality and safety standards have come under the spotlight. According to analysts, however, developers are unlikely to drop their build-fast, sell-fast approach anytime soon.
With current business models firmly in place after years of unending growth and ongoing rumors of a near-future end to current government-led regulations, developers have struggled to manage debt levels and maintain revenue streams.
In the first half of 2018 the bad news has continued, with apocalyptic-type reports of mounting debt and tightening regulations. The recent wave of government measures have further limited the range of possible financing avenues. At the same time, a weakening Yuan has increased the cost of offshore borrowing.
In an effort to boost revenue, developers have been leaning on a build fast and sell fast strategy, but complaints and issues are already starting to appear. Country Garden Holdings has come under fire for the deaths of six workers at a construction site in Anhui, and, according to reports, there was another death in Shanghai and sinkholes at a Hangzhou site.
Buyers in Beijing hung banners outside of Longfor Properties’ sales offices after they experienced serious issues such as collapsing stairs and sinking ground. Another 100 buyers led a protest in Chengdu after having issues with homes built by a number of big-name firms, including Longfor Properties, Vanke Property, Poly Property, Sunac China, and China Aoyuan Property Group.
Li Jun, Executive Director of Greentown China Holdings, believes that there will a wave of complaints over the next two years as problems continue to emerge, and many property analysts predict that developers will stick to this strategy in the short- to mid-term future.
“For now, it is still the most efficient way for developers to make a profit,” said Mizuho Securities Asia Property Analyst Alan Jin “Many of them are holding large banks of land from shopping sprees in previous years, so it does not make sense for them to slow down as that would mean they would get their money back late.”
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