Chinese property developers face rising complaints as rush to build hits safety and quality
Their earnings under pressure from government market curbs and tight funding, developers are trying to build and sell as many units as they can, as fast as possible
Mainland China’s property developers are facing a rising tide of complaints about safety and quality as they rush to build and sell as many properties as possible to cope with declining income in the face of government measures to cool the market.
With caps placed on the prices they can sell at, as well as increasing difficulty in getting funding because of government concerns over rising debt, developers have adopted a “build fast and sell fast” approach that has led to construction site deaths and protests by buyers over poor workmanship.
“Under the current tougher environment, some developers are turning in sloppy work by blindly pursuing speed and squeezing the construction period,” said E-house China R&D Institute director Yan Yuejin.
China’s property market has been booming for years, with the constantly rising prices proving a boon to developers. But with homes in many cities now unaffordable for most people and debt levels at developers surging, alarm bells have been ringing and both the national and local governments have imposed a series of measures to try and bring prices down.
In addition, developers are finding it harder to get funding as banks balk at the risk, while those who borrowed overseas are finding their cost of repayments surging as the Chinese yuan currency weakens. Shen Jianguang, chief economist at JD Finance, said that funding has become so tight that any developer ranked outside the top 10 would face higher interest payments, while any outside the top 30 would be lucky to get funds at all.