Sunday, June 16, 2024
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Dashed dreams: Evergrande’s showpiece resort island

HONG KONG (CNA) – The opening last year of the world’s largest artificial resort island, developed by China Evergrande Group for nearly USD13 billion, was the realisation of the ambitions of founder Hui Ka Yan, who sketched a design for the project himself.

Now Evergrande is in default to global bondholders, the former Communist Party secretary of the small Hainan island city where Ocean Flower Island was built is serving a life sentence for bribery, and officials in Danzhou city have ordered 39 of the project’s towers – roughly 3,900 of the island’s 65,000 homes – to be demolished over environmental and construction violations.

The demolition of part of the 2,000-acre, flower-shaped project would add to the woes of what was once China’s top-selling developer, which is now reeling under more than USD300 billion in debt, struggling to revive sales and repay creditors and suppliers.

Government documents related to the project and details provided by two sources with direct knowledge of the island’s development show how the work skirted environmental and zoning regulations during nearly a decade of development, eventually drawing scrutiny from regulatory authorities.

The two sources, who were close to the project and Hui’s thinking, declined to be named as they were not authorised to speak to the media.

Reuters couldn’t determine when or whether the demolition would be carried out. Evergrande did not respond to Reuters requests for comment or to queries for Hui.

Hainan province officials and local authorities in Danzhou, which has direct oversight of the project, did not respond to requests for comment.

The saga is a cautionary tale for China’s property giants as the country under Xi Jinping undertakes a sweeping regulatory crackdown that is reining in the most free-wheeling segments of the private sector economy.

The 39 buildings developed by China Evergrande Group that authorities have issued a demolition order on