More than a thousand Shenzhen homeowners took to the city’s streets last week to complain about the poor quality of the properties they bought from China Overseas Land & Investment Ltd. (COLI) (00688.HK). The rare demonstration exposed a huge crack in consumer confidence in the state-backed property brand’s oft-touted emphasis on excellence.
The protest was all the more remarkable because homeowners rarely talk publicly about structural faults in their home since it would adversely affect the property’s resale value. The collective action only indicates that the problems are intolerable. According to photos doing the rounds online, the Shenzhen project under fire has severe seepage, a large number of cracks, jerry-built walls and generally shoddy work.
The city government had ordered COLI to take remedial action but its efforts failed to dispel doubts about the homes. And even when it continued to be swamped by quality complaints, the company repeatedly stressed that the problems would not endanger the structural integrity of the buildings.
All this trouble descended as company management said contracted sales in the first 10 months of 2013 met its full-year target of 120 billion yuan (US$19.61 billion), according to a Credit Suisse research report. By contrast, the figure was just 18.89 billion yuan in 2008.
It seems that the quality of construction of the leading property developer can’t keep up with the rapid pace of its nationwide expansion. Earlier this year, the controlling shareholder of COLI, which is also the main contractor of the troubled project, was accused by China Central Television of using cement mixed with substandard sea sand in its projects in Shenzhen.
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