• A group of around 1,500 homebuyers say they have yet to see the apartments they paid for about eight years ago, as challenges persist in China's property sector.
• The promise was they would be ready by 2019, but the majority are still unfinished, according to five of the homebuyers, who requested anonymity out of fear of retaliation.
• "I feel like I've been tricked this whole time," one buyer said on Monday in Mandarin, translated by CNBC.

BEIJING — A group of around 1,500 homebuyers in the Chinese city of Tianjin, near Beijing, have yet to see — let alone move into to — the apartments they said they paid for about eight years ago.

As is common in China, the apartment complex in Tianjin sold the units before they were completed. The promise was that they would be ready by 2019, but the majority are still unfinished, according to five of the homebuyers, who spoke to CNBC via telephone but requested anonymity out of fear of retaliation. The buyers are a mix of people who paid in full upfront but also in smaller installments. Their concerns are just one example of the wider challenges that persist in pockets of China's property sector.

Following early efforts to recoup their money or to garner information about their property purchases, a few buyers said police visited their homes, sometimes in the middle of the night.

"I feel like I've been tricked this whole time," one buyer said in Mandarin, translated by CNBC.

"My only request is that I can return the house and get my money back," the buyer said. "Even if I am able to get the house, I will feel bad."

Some buyers said they had bought the apartments as a place for their parents to retire, or for their children to attend school nearby. In the eight years of waiting to move in, one buyer said one of their parents had died while waiting for the new home, and another said their child had grown up and found another school instead.

"I think it's just another reflection of how deep the troubles are for the real estate developers," Dan Wang, chief economist at Hang Seng Bank (China), told CNBC.

"What's happened in Tianjin is not a unique phenomenon," she said. "I think there should be more of those cases coming out in the near term."

Real estate developers in China racked up high levels of debt as they expanded rapidly during the property market boom of past decades. The pace of debt-fueled development outstripped demand.

In one high-profile case, property firm Evergrande defaulted on its debt in late 2021. At the time, the company was the world's most indebted developer and in the run-up had 1.26 trillion Chinese yuan ($174 billion) worth of projects under construction in 2020 — about 70% more than the company was able to sell that year, and far more than it actually completed.

In all, Nomura estimated late last year that there are around 20 million unconstructed and delayed pre-sold homes in China.

Asking buyers for more money

The developer in this case, Zhuoda Yidu, late last month asked homebuyers to approve a dispute settlement, a copy of which was seen by CNBC.

The document said the apartments could be completed in 2025 or 2026 if the buyers agreed in the next few weeks to pay any outstanding balances on their property purchase, along with other costs as determined by the developer.

The proposal did not offer an alternative, and said the properties must be valued at pre-market slump prices — or about double or more than the current level, according to comparisons with listed brokerage prices. That's not to mention eight years of wear and tear, and the possible disruption to the families' life plans.

"The money for the down payment was from my dad," one buyer said of a house bought in 2016. "I can't tell him it's not finished. During Covid I told him there were delays. Now Covid is gone and there are no excuses."

In addition to paying in full for that apartment, this one buyer is still paying a monthly mortgage of about 2,800 yuan for a second apartment in the same complex, which was meant for a relative.

The situation has fueled a sentiment of feeling that no matter how much money is spent, the buyers will never get their homes, one of the sources said. The individual noted that in a group chat of around 500 fellow buyers on social media roughly 90% rejected the developer's proposal.

Zhuoda Yidu was not available for comment, despite multiple CNBC attempts to call and email the company and its representatives. A lawyer handling Zhuoda Yidu's bankruptcy and liquidation case referred CNBC to the Tianjin Wuqing District People's Court for comment. The court did not respond to CNBC.

Wang said it was the first she'd heard of homebuyers having to pay more to get their finished apartments.

She said prior to the Covid-19 pandemic there were sporadic cases of delayed deliveries, especially in cities such as Tianjin, where real estate development surged in 2014 and 2015. She said that at the time local authorities and developers would typically find a solution quickly since it involved a lot of money for an average family.

Interest in Tianjin and other areas surrounding Beijing surged prior to the pandemic as people working in China's capital city looked for more affordable housing options at a time when prices were near a peak.

Beyond China's recent real estate woes, the homebuyers' dilemma has its roots in a household registration system — called hukou — which dictates where one's children can attend public school, among other benefits. Cities such as Tianjin have also used hukou policies to attract new residents.

But Wang noted an increase in delivery delays after Covid, as developers struggled to keep operating, resulting in a "systemic problem."

China's top leadership said at a meeting in late April they would continue to work to ensure the delivery of homes and protect homebuyers' interests.

China's Ministry of Housing and Urban-Rural Development and its local unit in Tianjin's Wuqing district did not provide a comment when contacted by CNBC about this story.

The developer Zhuoda is far from being one of China's largest. Some of the homebuyers who spoke to CNBC said that after making initial payments, they found out the property in question was not necessarily a certified project.

In a sign of issues with the project early on, the official "Tianjin Daily" newspaper reported back in March 2017 that the same Xiyu Garden project constructed by Zhuoda Yidu Investment in the Wuqing district of Tianjin violated the city's real estate transaction rules by collecting money from buyers without obtaining a license for commercial housing sales. The report said local authorities imposed penalties and ordered rectification. Records accessed via business database Qichacha showed Zhuoda Yidu didn't get licenses for commercial housing sales until August 2018, although it had received construction permits for part of the project as early as 2016.

One homebuyer confirmed to CNBC that after the incident described in the Tianjin Daily report, the buyers were able to get a purchase certification.

The buyers of the Tianjin apartments interviewed for this story said they knew of an unsuccessful effort to get the project on the central government's list of unfinished homes (which would usually guarantee financing until completion), although it was unclear whether that was due to the project's certified status. Some saw the latest proposed dispute settlement as a response to central policy changes, since it was a path toward finishing construction instead of leaving the project hanging.

The real estate sector's troubles have also weighed on local government finances, which once generated significant revenue from sales of land to developers.

Among high-income Chinese cities, Tianjin has one of the highest debt levels relative to GDP, according to S&P Global Ratings.

For many households, real estate has accounted for the bulk of their wealth, often the result of grandparents and relatives pooling their savings.

One home buyer sunk 190,000 yuan into what was a 700,000 yuan purchase of a two-bedroom apartment, 90 square meters large, in the unfinished Tianjin apartment complex.

That's several years' worth of savings. The average per capita disposable income in 2023 for Beijing city residents was 88,650 yuan, and 51,271 yuan in Tianjin, reflecting the far lower cost of living.

"We don't have that much money," the buyer told CNBC. "If we had enough money we would be buying in Beijing."