Evergrande. Photo: CFP

The tourism development unit under the debt-stricken China Evergrande Group was ordered to remove its mega resort project in Danzhou, South China's Hainan Province, according to an administrative penalty notice issued by local authorities citing the company's unlawful means of obtaining the project certificate.

According to the notice, which has been circulating online since the weekend, the project - covering 434,941.46 square meters or 39 buildings of the Ocean Flower Island, an artificial archipelago in Danzhou, the world's largest of its kind - was ordered to be demolished within 10 days.

In response, Evergrande Fairyland Group said late Monday that the penalty only targeted 39 buildings of the No.2 Island, and did not involve other land development of the project, meaning houses that have been settled by 60,567 home buyers and not yet settled by 628 owners will not be affected.

"We will communicate actively and deal with the issue well according to the guidance of the penalty notice," the company said.

Evergrande issued a filing to the Hong Kong Stock Exchange on Monday saying that its shares will be temporarily suspended from trading. All subordinate businesses related to the company will also temporarily halt trading on the market.

Ocean Flower Island is a major project, both invested and developed by Evergrande in Hainan. After more than six years of construction, a total of approximately 81 billion yuan ($12.75 billion) has been invested in the project to date, according to Evergrande Fairyland Group.

The No.1 Island, composing 21 business hubs including an international conference center, an international convention and exhibition center, a hotel, a sports and fitness center and a film and television base, received =5.5 million tourists since January 1, 2021.

The mega project is one of several real estate developments in Hainan that have been subject to a "double suspension" - of both construction and sales.

In April 2019, Hainan Province investigated and addressed violations of laws and regulations relating to Ocean Flower Island, with an administrative fine of approximately 215 million yuan imposed. 

Global Times