Inside China Today

Financial tsunami halts real estate development in China

With the impact of the global financial crisis, the already waning Chinese property market is facing increasingly severe times, with developers forced to sell off apartments at lowered prices, and some even having to stop already underway construction due to funding shortages, forcing residents to relocate.

Residents planning for relocation are being affected by developers pulling the plug on construction already under way. Mr Lu and others due to relocate are lobbying to return to their original homes.

Developers experiencing a shortage of funds have stopped development after two years. Mr Lu says they are asking the government, who had previously handed them over to the developers who won bids to redevelop their land, to send them back to their homes.

Overseas media has reported that with the worsening of the financial crisis in the US, foreign investors in China have abandoned real estate in exchange for cash. This is adding fuel to fire to the already waning Chinese real estate market. September and October are usually busy months for apartment sales, but finalised contracts since September is less than 50% of that in the same period last year. Many apartments in Shanghai are even posting nil transactions for the entire month.