Shanghai Property Boom Takes Toll on Some Homeowners

By Lucy Hornby

SHANGHAI (Reuters) – Around the corner from a noisy Shanghai construction site, Cai Zhengfang lies bruised and sore, a victim of a property boom in China that has led to families like hers being forced out of their homes.

Shanghai’s booming property market has made many rich, but not Cai and her family. They say they were not properly compensated when property developers tore down their home in a prime location in Shanghai, near a historic waterfront area.

"Our family was stable. Not rich, but we could afford what everyone else could afford. When they tore down our house they destroyed everything we had," said Cai, a 48-year-old mother of one.

Her family has spent the last six years in a fruitless quest for redress from the Chinese authorities and the property developers who built a fancy 20-floor apartment block where the family home once stood.

Their story is shared by many Chinese homeowners ordered to leave their houses in return for compensation in the form of apartments in remote parts of the city as developers seek to turn Shanghai into one of Asia’s most vibrant 21st Century cities.

Skyrocketing real estate prices have made businessmen and ordinary citizens hungry to get a piece of the action.

Block after block of Shanghai homes, throwbacks to the unique blend of foreign and Chinese influence in the city in bygone years, lie in rubble as developers race to replace them with luxury apartment buildings, hotels and office blocks.

Even the city’s signature lane houses, many of which are protected as heritage sites by the government, have been razed as the building boom turns Shanghai into a high-rise metropolis.

After appealing their case through the Shanghai court system to no avail, Cai joined a delegation of evicted homeowners who went to Beijing to urge the government to step in. She has spent most of the last two-and-a-half years in Beijing, going from one government bureau to another with a suitcase full of papers.

UNDER ATTACK

But she suffered a major set-back in early August when she said men connected to the Shanghai city government rounded her up in Beijing along with about 100 fellow petitioners and sent them back to Shanghai on an overnight train.

The men hit her in the mouth, kicked her in the back and pulled her hair and clothes during the forced repatriation, she told Reuters in an interview at a cheap hotel in downtown Shanghai where her family is living temporarily.

Cai’s story could not be independently verified, but she bore livid bruises on her arm and face and had a paper detailing the beating, signed by fellow petitioners who witnessed the attack.

The city government, mindful of Shanghai’s growing role as an international business hub and seeking to head off adverse publicity before hosting the World Expo in 2010, says it does its best to protect residents’ property rights.

But people like Cai have their doubts.

Shanghai property tycoon Zhou Zhengyi — once ranked as China’s 11th richest man — finished a three-year jail sentence in May in a case that lifted the lid on real estate corruption in the city.

His relatively light jail term, the same sentence given to a lawyer who defended some of his victims, angered the people the government says it is trying to protect: those forced out of homes to make way for Shanghai’s redevelopment.

PROPERTY RIGHTS

To be sure, some homeowners are happy to receive modern apartments in return for leaving decaying homes in crowded neighborhoods, often without proper drainage and sanitation. Many of them lacked title to the homes they left.

Others, like Cai, feel cheated.

Cai’s mother lived in the two-story family home since before the 1949 Communist takeover. Her children claim many of her belongings were destroyed without compensation when thugs hired by the developer forced them out.

Cai’s family rejected the developers’ offer of a replacement apartment, saying it was in a remote district without shops or proper services and worth far less than their home, which stood on prime real estate in central Shanghai.

"I see it as our right as citizens to sell or not if we want to. If we can come to an agreement, fine. But they just take and tear down," Cai said.

"No normal person could accept this."

Cai’s brother, who asked not to be named, estimated the family has spent 500,000-600,000 yuan ($62,500-$75,000), much of it borrowed, to obtain appropriate compensation.

But the cost to the family has not just been monetary.

Cai’s daughter’s schooling has been neglected, she said, and her family has had to live like nomads moving from one borrowed room to another as they seek justice.

Today, two upscale apartment blocks tower over the neighborhood where Cai used to live.

The apartments sold for 8,000 yuan ($1,000) a square meter when the building was first completed. Their value has already risen to 20,000 yuan ($2,500) per square meter, said a beaming security guard at the complex.