Kaisa says its US$150 million Xi’an development project is at risk over dispute with local developer Xingzhengyuan
- Kaisa is in a dispute with Xi’an Xingzhengyuan over a 1 billion yuan project to transform a Xi’an shanty town into residential buildings
Kaisa Group Holdings faces losing its entire investment of almost US$150 million in a key urban redevelopment project, underscoring the vagaries in China’s property market.
The Shenzhen-based home builder, which gained notoriety in 2015 when it became the first developer from the nation to default on US dollar debt, has invested more than 1 billion yuan (US$146 million) in a project in Xi’an to transform a shanty town into residential dwellings.
The project had been abandoned for about two years before Kaisa came on board in August 2017, acquiring a majority stake in the development from Xi’an Xinlicheng and the rights to continue construction.
However in September of that year, another local builder, Xi’an Xingzhengyuan, removed Kaisa’s legal title to the project, making its investment worthless, Kaisa said in a statement to Bloomberg News on Wednesday.
Tensions between the two came to a head last week when Xingzhengyuan allegedly drove excavators and fork lift trucks into the construction site, and caused a Kaisa local executive to seek medical treatment, according to the statement.
Officials at Xingzhengyuan weren’t immediately reachable.
Kaisa has also been pursuing Xingzhengyuan in court, with the aim of winning back its legal rights to the site.
Waving goodbye to a 1-billion-yuan development project isn’t something Kaisa will be able to easily stomach. Its net income for 2017 was 2.5 billion yuan after three years in the red. Kaisa’s Hong Kong-traded shares slumped as much as 8 per cent on Wednesday, the most in a month.