http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20140817000030&cid=1202
Rising number of real estate investors default in China
An increasing number of Chinese real estate investors have become unable to pay their mortgages and are facing legal action from banks, writes our sister paper Want Daily.
The situation has emerged in China's first-tier cities, with fears that it might develop into a full-blown version of the US subprime mortgage crisis that sparked the global financial status in 2008. Chinese media outlets have reported however that the investors who have defaulted represent sporadic cases rather than a trend.
Several cities such as Wenzhou in Zhejiang and Ordos in Inner Mongolia have underone high-profile property crises. Many are still unable to repay the banks and face mounting legal problems, according to Want Daily.
Several real estate projects in second-tier cities which were very popular when launched have run into dificulties and developers have been forced to shift their inventory at lower prices.
The situation has been brought about in part by speculators from Hong Kong, Macau and Taiwan who became pessimistic about the future of real estate in China, Want Daily said.
A document from a Jiangsu court reveals that the number of mortgage disputes this year has doubled from last year. Among 367 legal cases involving real estate disputes, there were 98 cases in which investors were unable to pay their loan back.
The document also suggested that over half of the defendants were from Fujian province. Several other cases involved groups of friends and family members who banded together to buy up real estate but when their banks called in their loans simply allowed the banks to repossess the properties without showing up in court.
