BEIJING- Even China’s population of 1.4 billion would not be enough to fill all the empty apartments littered across the country, a former official said on Saturday, in a rare public critique of the country’s crisis-hit property market.
China’s property sector, once the pillar of the economy, has slumped since 2021 when real estate giant China Evergrande Group defaulted on its debt obligations following a clampdown on new borrowing.
Big-name developers such as Country Garden Holdings continue to teeter close to default even to this day, keeping home-buyer sentiment depressed.
As of the end of August, the combined floor area of unsold homes stood at 648 million square meters (7 billion square feet), the latest data from the National Bureau of Statistics (NBS) show.
That would be equal to 7.2 million homes, according to Reuters calculations, based on the average home size of 90 square meters.
That does not count the numerous residential projects that have already been sold but not yet completed due to cash-flow problems, or the multiple homes purchased by speculators in the last market upturn in 2016 that remain vacant, which together make up the bulk of unused space, experts estimate.
“How many vacant homes are there now? Each expert gives a very different number, with the most extreme believing the current number of vacant homes are enough for 3 billion people,” said He Keng, 81, a former deputy head of the statistics bureau.
“That estimate might be a bit much, but 1.4 billion people probably can’t fill them,” He said at a forum in the southern Chinese city Dongguan, according to a video released by the official media China News Service.
His negative view of the economically significant sector at a public forum stands in sharp contrast to the official narrative that the Chinese economy is “resilient”.
“All sorts of comments predicting the collapse of China’s economy keep surfacing every now and then, but what has collapsed is such rhetoric, not China’s economy,” a spokesperson at the foreign ministry said at a recent news conference.
Shares of China Evergrande plunged as much as 24 percent on Monday after the embattled developer said it was unable to issue new debt due to an ongoing investigation into one of its subsidiaries, dealing a fresh blow to its restructuring plans.
“In view of Hengda Real Estate Group Co Ltd, a principal subsidiary of the company, being investigated, the group is unable to meet the qualifications for the issuance of new notes under the present circumstances,” Evergrande said in a statement late on Sunday.
In August, Hengda Real Estate said it was being investigated by China’s securities regulator for suspected violation over the disclosure of information.
The development opens a new front for the world’s most indebted company just a week after police detained some staff at its wealth management unit, sending its shares slumping and piling more pressure on Evergrande’s restructuring plans.
Shares of Evergrande, which has more than $300 billion in liabilities, fell as much as 23.6 percent to HK$0.42, in a broader market down 0.6 percent .
Earlier this month, Evergrande said it had delayed making a decision on offshore debt restructuring from September to next month to allow holders of its debt more time to consider its proposal.
Evergrande needs approval from more than 75 percent of the holders of each debt class to approve the plan, which offers creditors a basket of options to swap debt for new bonds and equity-linked instruments backed by its stocks and those of its Hong Kong-listed units.
Prominent developers such as Country Garden Holdings continue to teeter close to default, keeping home-buyer sentiment depressed and prompting Beijing to implement a raft of measures to prop up the sector and spur property demand.
The crisis in the property sector, which accounts for roughly a quarter of the world’s second-largest economy, has roiled global markets, with moves by Beijing to bolster the industry appearing to have little impact so far.
As of the end of August, the combined floor areaof unsold homes stood at 648 million square meters (7 billion square feet), the latest data from the National Bureau of Statistics (NBS) show. -Reuters
