A $100 billion industrial park in Shenzhen, China, is on the verge of delivery when the project is suddenly seized and the developer reorganized in bankruptcy. The project, which was once a star project hotly promoted by the local government of the Communist Party of China, burst into flames in an instant, casting a shocking bomb on the industry and leaving hundreds of owners dumbfounded.
According to a comprehensive report by the mainland media, a few days ago, the project of Shenzhen Tiangu Building was about to be handed over, but it was revealed that the developer had been filed for bankruptcy reorganization by creditors, and about 330 suites had been judicially seized.
Once a star project
(hereinafter referred to as Huaxun Investment), the legal representative of which is Wu Guangsheng, and the parent company is Huaxun Ark Technology Co.
In August 2015, at the groundbreaking ceremony of Tiangu, Wu Guangsheng said that Tiangu adopts a new business model of “property rights for equity”.
In the 2015 Bao’an District Government Work Report, it was also mentioned that “the ‘property rights for equity’ model promotes the successful landing of the Huaxun Ark China Sky Valley project”. Shenzhen Baoan District has high expectations for the Sky Valley project, calling the project a “100 billion dollar project”, which will be the first domestic satellite Internet research and development, commercial operations, industrial clustering, industrial incubation and evolution of the whole industry chain innovation industrial park, and will become a satellite Internet industry cluster in Asia and the world after completion.
In 2019, the Tiangu Building project entered the market. At that time, an agent released information that Tiangu was a “condominium” with a total price starting from more than one million per set.
Just as the Sky Valley project was approaching its delivery date, the owners waited for news of the developer’s bankruptcy restructuring.
Bankruptcy reorganization
An announcement from Shenzhen Intermediate Court on March 31, 2021 stated that Huaxun Investment filed for bankruptcy reorganization.
The announcement showed that Huaxun Investment had run out of funds and was unable to undertake the renewal of the Tiangu project project under construction; at the same time, as the main asset of Huaxun Investment, the Tiangu project had difficulties in realizing, and the realization of the status quo might lead to a significant depreciation of the property value, which was obviously insufficient to settle all debts.
In fact, in November 2020, there were microblogs posted by homebuyers expressing their concerns about the inability to deliver the Tiangu building.
In addition, there is also a document circulating on the internet, “Minutes of Tiangu owners’ meeting”, which shows that if the restructuring of Huaxun Investment Company fails and enters bankruptcy liquidation, the buyers will only get back 10% of their money.
New government policy to prevent individuals from buying
This time, the project involved 993 “single dormitory” units in the Sky Valley building. The project was granted a pre-sale license on July 15, 2019, but the purchaser needed to be a business. Meanwhile, the location of the Tiangu Building is the core of Shenzhen’s Bao’an District, where the price of business apartments currently reaches 70,000 yuan per square meter or more, but the price of the Tiangu Building’s single dormitories was only 30,000 yuan per square meter at the time.
According to media reports, when sales were booming in 2019, there were people at the entrance of the marketing center teaching how to register a company, which could be operated by paying only 100 yuan (RMB, the same below), without paying property tax for three years and 4.2‰ per year after three years, and there was another advantage of buying in the name of the company, “it’s more convenient to trade, when the time comes, you only need to do a company’s legal person change on it.”
However, in January 2020, the Shenzhen government issued the Notice of the General Office of the Shenzhen Municipal Government on the Issuance of the Management Measures for the Transfer of Industrial Buildings and Supporting Buildings in Shenzhen (hereinafter referred to as “the Notice”). almost blocked the path for individuals to purchase.
The Notice shows that the transferee of industrial supporting dormitories should be registered by law and hold the certificate of real estate rights of industrial buildings in the administrative district where the industrial supporting dormitories are located. Among them, the construction area of the plant shall not be less than 1,000 square meters; the construction area of the R&D room shall not be less than 300 square meters.
In other words, the future purchase of such supporting dormitories, in addition to the establishment of enterprises, but also need to first have 1,000 square meters of factory buildings or 300 square meters of research and development premises. This new policy basically keeps individual purchasers out of the market.
Currently, Huaxun Investment has been listed as an executee, with a total amount of about 2.029 billion yuan being executed. On the website of Shenzhen Municipal Housing Bureau, some of the pre-sale properties of the Tiangu Building project have been shown as “judicially sealed”, which means that the houses are locked by the judicial authorities. According to the relevant laws, whether or not the owner’s house can finally be protected depends on whether or not the subsequent project can finally complete the construction, delivery and real estate title certificate successfully.
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