Homebuyers demand refunds for delay

The biggest urban apartment complex project in Xi'an, with a projected cost 11 billion yuan ($1.74 billion), has stopped selling homes after a two-year construction delay.

Shaanxi Jiacheng Real Estate Development Co, which owns the project, had sold more than 1,000 apartments in the past three years for about 500 million yuan while promising houses by the end of this year.

However, the project has nothing to show for it except three unfinished 10-story buildings in an area that was expected to have 33 buildings in a tract of 1.7 million square meters.

The project's sales center is closed, and people who have made down payments have been unable to get refunds. Descriptions of this project in major domestic real estate online trading websites have a "sales suspended" notice.

The project, Chang'an Ji, was jointly developed by the company and the government of Xincheng district, where the project was set up in 2011.

Facing financing difficulties and capital shortages, the company started selling apartments in 2013 before obtaining the Xi'an government's approval, the city government said.

When buyers discovered that the project was so far behind schedule and that the company had stopped construction, making it impossible for them to have new homes by the end of the year, they protested on July 19 in front of the project's sales center, demanding refunds.

The district government said it has formed a group to investigate why the project was halted and addressing the problem with buyers who can't get refunds.

Meanwhile, an anonymous public letter posted on social media on Monday said the main reason the project was suspended was that the district government could not complete the demolition work and resettlement on time, and the development area was reduced by 310,000 square meters because of "green belt" construction.

Yan Yuejin, an analyst with E-house China R & D Institute based in Shanghai, said some similar construction issues have occurred in third-and fourth-tier cities, but it is rare to have such a major problem with a big real estate project in second-tier cities like Xi'an.

Since the project is backed by the local government, it is the government's responsibility to review the risk control and capital management, Yan said.

"There must have been a crucial mistake made during the preliminary work or approval process of the project," he said.

dujuan@chinadaily.com.cn