Ocean Flower Island in Danzhou
On its official website the World Record Association (WRA) describes itself as a commercial firm that provides a “quality record service for the whole world”. It was established “through approval from the Hong Kong government,” it adds.
Current record holders include Harshvardhan Gupta from India, who raced through 188 half push-ups in 60 seconds, and China’s Zhang Guohang, who built the world’s biggest pen at 202cm tall.
China Evergrande was another new entrant to the WRA’s record books in 2015, reporting the briskest home sales ever. This was confirmed by certification officer Michael Vincent Heister, who noted that new apartments at its Ocean Flower Island complex in Hainan had been selling at a pace of one every 3.2 seconds.
With a reclamation area about a quarter the size of Macau, Ocean Flower was described as the world’s biggest ‘man-made island’ when construction commenced in 2015. Evergrande then invested more than Rmb160 billion ($25.2 billion) in its costliest ‘tourism property’ project yet.
But the accolades for Ocean Flower since its record-breaking sales push have been rather less glorious. The Economic Observer reported early last year how it had topped an architecture magazine’s list of ‘China’s ugliest structures’. Much worse, a former mayor who had enthusiastically backed the project was jailed for life in 2020 on bribery charges tied to his property market dealings.
Ocean Flower was back in the news headlines for the wrong reasons this month. Trading in Evergrande’s shares was already suspended as investors waited to see if the debt-laden developer was going to announce a major restructuring plan. But the embattled firm added to their dismay by reporting that it had received an order from the city government of Danzhou in Hainan to tear down 39 residential blocks in the Ocean Flower reclamation area. The near-complete section of the project needed to be demolished in just 10 days, the directive stipulated, although Evergrande filed an immediate appeal against the order.
The struggling property giant is charged with infringements related to the construction of the luxury seaside condos. One of the biggest problems for Ocean Flower has been its sheer scale. Larger reclamations have been treated unfavourably by a central government keen to protect the country’s coastline, for instance. But the Central Commission for Discipline Inspection (CCDI) alleges that the Danzhou project went ahead regardless, with Evergrande allowed by local officials to skirt the rules by splitting the artificial island into 36 much smaller projects.
The construction effort has resulted in grave damage to marine life, the CCDI said, as well as encouraging “wealth flaunting” that fosters conflict and alienation in the broader neighbourhood.
Greenland, another financially troubled property developer, encountered a similar situation last year when it was chastised for illegal construction of a residential project in Chongming, a large island in the Yangtze River estuary where no commercial development was permitted (see WiC529). The work there has since hung in limbo with construction and presales suspended.
Evergrande has insisted that the demolition order won’t affect the remainder of the development, where more than 60,000 apartments have been delivered to buyers. Others describe the Danzhou government’s demands as extreme or perhaps as an effort to seize control of the project before Evergrande’s other creditors can grab it. At least 11 similar land parcels have been targeted for confiscation by local authorities for reasons such as missing fee payments, Bloomberg notes.
Evergrande’s desperate efforts to stay afloat continued this month when it was reported to have moved out of its rented headquarters in Shenzhen to a property that it owns in another bid to cut costs. The same building was the scene of angry protests last September when investors forced their way into its lobby to demand repayment of loans and financial products, Reuters reported.
Caixin added that senior executives have already moved to the provincial capital Guangzhou, as part of the bid to negotiate a restructuring deal with the government of Guangdong.
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