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Text｜Chen Xi and Liu Jianzhong

Editor｜Liu Jianzhong

A project in Nanjing, Jiangsu Province, which has been suspended for nearly two years, has recently attracted public attention. The project is called "Pearl River Four Seasons City" and is the first project in China where a real estate developer agreed to refund the house after official coordination.

Zhujiang Four Seasons City is the first project of Zhujiang Investment Group (hereinafter referred to as "Zhujiang Investment") in Nanjing. Zhujiang Investment's official website has a related introduction: Zhujiang Four Seasons City consists of five plots of land with a total area of ​​about 600,000 square meters. It includes about 40 square meters of residential buildings, about 90,000 square meters of office bases, about 65,000 square meters of self-owned shopping malls, and about 30,000 square meters of star-rated hotels.

The original land purchasing companies of the five plots mentioned above are all controlled enterprises of the Jiangning District Government of Nanjing. The five plots are: Western Road Bridge G96, Jiangning Urban Construction G97, Huining Municipal Construction G98, Jiangning Urban Construction G104 and Western Road Bridge G105. The auction time was December 2019. The transaction floor prices at that time were: 6,884 yuan/square meter, 9,318 yuan/square meter, 9,591 yuan/square meter, 6,746 yuan/square meter, and 6,890 yuan/square meter. The total price of the five plots is 4.52 billion yuan.

At the 2020 China Nanjing Golden Autumn Economic and Trade Fair, Zhujiang Investment and the Jiangning District Government officially signed an agreement, and the Jiangning District Government handed over the above five plots of land to Zhujiang Investment for overall development.

From June to July 2020, Zhujiang Investment established five project companies to develop the above five plots of land: Nanjing Dingyue Real Estate (plot unknown), Nanjing Dingtai Real Estate (G97), Nanjing Dingming Real Estate (G98), Nanjing Dingrui Real Estate (G104), Nanjing Dingteng Real Estate (plot unknown). In the above five companies, Zhujiang Investment controls 51% of the shares, and Nanjing Airport New City, representing state-owned assets, holds 49% of the shares.

Although there are five plots of land, the ones that have really entered the development stage are G98 (project registration name: Yueming Jiayuan) and G104 (project registration name: Dingrui Jiayuan). G98 was first launched in July 2021, with buildings 3, 5, and 6, with a total of 154 units; in January 2022, buildings 1, 2, and 7 were added, with a total of 128 units. The six buildings have a total of 282 units, with an average price of about 20,000 yuan per square meter, and the contract stipulates that they will be delivered on June 30, 2023.

In April 2022, the sales of Buildings 1, 2, 8 and 9 of the G104 plot will start, with a total of 231 units. The unit types and prices are basically the same as those of the G98 plot, and will be delivered in June 2024.

According to the people who participated in the sales at that time, the sales of the projects of the above two plots of land were not good, and after June 2022, the project construction began to progress slowly.

In January 2023, some owners complained that the construction of the G98 plot had been suspended since July 2022 and had remained suspended. At that time, the developer provided a solution of replacing the G98 owners with the G104 project. But not long after, the construction of the G104 plot also stopped.

Up to now, although several buildings of G98 and G104 have been capped, the overall situation is far from being delivered. The following pictures show the two plots of land on Baidu satellite map on July 29, 2024.

People's Daily Online: Officials actively intervene

On March 26, March 28, and April 7, 2023, netizens who purchased the G98 plot reported the situation on the People's Daily Online Leaders Message Board. The message on March 26 said that he bought a house in Zhujiang Four Seasons City, which was originally scheduled to be delivered at the end of June 2023, but the developer concealed the reality of the project suspension.

The Housing Security and Property Bureau of Jiangning District responded on April 17, saying that after verification, the main structure of Buildings 1, 2, 3, 5, 6, and 7 has been capped, and the contract delivery time is June 30, 2023. On March 25, our bureau, together with the Airport Management Committee, organized a face-to-face meeting between the owner and the developer, urging the company to speed up the resolution of the conflict with the general contractor (Suzhong Construction) and resume work as soon as possible. Regarding the refund of check-out, the company said it would fully communicate and negotiate with the owner to deal with it.

From the above messages, it can be seen that negotiations on check-out refunds had already begun as early as April 2023.

In June 2023, December 2023 and February 2024, some home buyers still reported similar problems on the People's Daily message board.

Nanjing Jiangning Economic and Technological Development Zone (hereinafter referred to as the "Development Zone") responded to these messages.

In response to the message in February 2024, the Development Zone responded on February 27 that the court ruled in November 2023 that Zhujiang and Suzhong Construction (the original general contractor) terminated the contract, and the new general contractor has entered the final stage of bidding. In response to the buyer's request for withdrawal, the Development Zone suggested that the buyer communicate and negotiate with the developer or resolve the issue through legal proceedings.

From the above messages, it can be seen that the development zone has not yet urged the developer to refund the purchase and return the house.

On June 3, 2024, the development zone’s reply to a message on People’s Daily showed that the development zone clearly proposed to start the G104 land supervision account funds before June 30 and start the check-out process, and Zhujiang said it would give a specific implementation plan before June 10.

On July 11, 2024, the Development Zone responded on People's Daily Online, saying, "On June 4, 2024, our committee held another coordination meeting on the conflict between buyers and sellers of Zhujiang G104, at which the developer was urged to come up with a refund plan and specify the corresponding time nodes. After the meeting, after discussion with the Zhujiang headquarters, the developer stated that it would only refund the refund, without any mortgage loan interest compensation. Currently, most owners have signed relevant agreements with the developer."

At this point, China's first collective return of unfinished buildings has entered the actual operation stage. The attention and coordination of the Development Zone Management Committee are commendable. However, return of housing is a complex system project, and the subsequent specific operations are also critical.

As the first case of collective room check-out in China, Zhujiang Four Seasons City will serve as a model for similar situations in the future.

How to operate the subsequent process is crucial

The Ministry of Natural Resources has said that it supports local governments to properly dispose of idle residential land that has been transferred in accordance with the principle of "ordering according to demand" by taking back or purchasing it as appropriate. The three plots of land, G96, G97, and G105, are relatively easy to deal with because the land is almost undeveloped.

However, nearly ten buildings on plots G98 and G104 have already been capped, and using only the funds in the escrow account to repay the homebuyers is certainly not enough. So who will bear the shortfall? And in what proportion? The author contacted Zhujiang Investment and the Management Committee of Nanjing Jiangning Economic and Technological Development Zone on this issue, but neither side gave a clear answer.

When the buyers have withdrawn from the property, the next step is to properly deal with the G98 and G104 plots and the assets attached to them. If the developer has paid the full amount and properly settled the buyers, then these plots of land together with the buildings on them should belong to the developer. However, under this condition, the developer will inevitably suffer investment losses.

Since April 2024, the government has introduced a number of new real estate policies, focusing on two major goals: digesting real estate inventory and ensuring the delivery of houses. According to relevant authoritative sources, digesting real estate inventory is mainly for the purpose of ensuring the delivery of houses. One of the ideas is that local governments purchase some commercial houses at reasonable prices and then use them as affordable housing. At present, the "purchase instead of construction" of affordable housing is undoubtedly a wise choice for "destocking".

Therefore, the government can also consider purchasing the two plots of land G98 and G104 for affordable housing. When using this method, in addition to the fair market price, should the developer be compensated partially?

If compensation is given, what is the standard of compensation? The specific operation steps and methods of this project may become an important reference for solving similar problems in the future.

However, it must be acknowledged that the Nanjing Four Seasons Joy City project has certain special features. First, the developer Zhujiang Investment has a good balance sheet and is still able to put out some funds. Second, as a high-level city, Nanjing still has a large demand for land.

Therefore, after all the problems of the Nanjing Four Seasons City project have been completely resolved, we still need to study, discuss and explore reasonable solutions to the "unfinished buildings".

The centralized and collective check-out of Nanjing Four Seasons Joy City is a good precedent. The local government actively coordinated and the developer did not evade responsibility in the end, which deserves praise. How this project is finally settled deserves the active attention of the whole society.